11 which of the following types of financial statement analysis would be used to see 4307826

11 which of the following types of financial statement analysis would be used to see 4307826

11) Which of the following types of financial statement analysis would be used to see how a company's operating expenses as a percentage of net sales have changed from one year to the next?

A) vertical analysis

B) horizontal analysis

C) ratio analysis

D) analysis of internal control system

12) The vertical analysis statement of Nobell Inc. is as shown below:

Nobell Inc.

Comparative Income Statement

Years Ended December 31, 2015 and 2014

(In millions)

2016

Percent of Total

2015

Percent of Total

Net Sales

$6,355

100.0%

$4,920

100.0%

Cost of Goods Sold

3,370

53.0

2,200

44.7

Gross Profit

$2,985

47.0

$2,720

55.3

Operating Expenses:

Selling Expenses

$675

10.6

$580

11.8

Administrative expenses

$410

6.5

425

8.6

Total Expenses

$1,085

17.1

$1,005

20.4

Operating Income

$1,900

29.9

$1,715

34.9

Other Revenues and (Expenses):

Interest Revenue

0

0

0

0.0

Interest Expense

(400)

(6.3)

(695)

(14.1)

Total Revenues and (Expenses)

(400)

(6.3)

(695)

(14.1)

Income Before Taxes

$1,500

23.6

$1,020

20.7

Income Tax Expense

230

3.6

210

4.3

Net Income

$1,270

20.0

$810

16.5

The figure 47.0% shown for gross profit in 2016 signifies that the ________.

A) gross profit is equal to 47.0% of net income

B) gross profit is increased by 47.0% over the previous year

C) gross profit is 47.0% of net sales revenue

D) gross profit is 47.0% of cost of goods sold

13) The vertical analysis statement of Nobell Inc. is as shown below:

Nobell Inc.

Comparative Income Statement

Years Ended December 31, 2015 and 2014

(In millions)

2016

Percent of Total

2015

Percent of Total

Net Sales

$6,355

100.0%

$4,920

100.0%

Cost of Goods Sold

3,370

53.0

2,200

44.7

Gross Profit

$2,985

47.0

$2,720

55.3

Operating Expenses:

Selling Expenses

$675

10.6

$580

11.8

Administrative expenses

$410

6.5

425

8.6

Total Expenses

$1,085

17.1

$1,005

20.4

Operating Income

$1,900

29.9

$1,715

34.9

Other Revenues and (Expenses):

Interest Revenue

0

0

0

0.0

Interest Expense

(400)

(6.3)

(695)

(14.1)

Total Revenues and (Expenses)

(400)

(6.3)

(695)

(14.1)

Income Before Taxes

$1,500

23.6

$1,020

20.7

Income Tax Expense

230

3.6

210

4.3

Net Income

$1,270

20.0

$810

16.5

Thee figure 16.5% shown for net income in 2015 signifies that ________.

A) net income is 16.5% of net sales revenues

B) net income is increased by 16.5% over the previous year

C) net income is 16.5% of gross profit

D) net income is equal to 16.5 times of the income before income tax

14) Shelcal Inc. provides the following data for the year 2015:

Sales Revenue

$400,000

Sales Returns and Allowances

1,200

Sales Discounts

800

Net Sales Revenue

$398,000

Cost of Goods Sold

$255,000

On vertical analysis report, the cost of goods sold as a percentage of net sales revenue will amount to ________.

A) 59.42%

B) 61.15%

C) 63.48%

D) 64.07%

15) Olivera Inc. provides the following data for the year 2015:

Sales Revenue

$625,000

Sales Returns and Allowances

20,000

Sales Discounts

5,000

Net Sales Revenue

$600,000

Cost of Goods Sold

$350,000

On vertical analysis report, the gross profit as a percentage of net sales will be ________.

A) 35.9%

B) 41.67%

C) 56.1%

D) 44.1%

16) Prepare a vertical analysis report of the income statement shown below. (Round off the percentages to two decimal places.)

 

2015

Net Sales$7,000

Cost of Goods Sold3,800

Gross Profit$3,200

Operating Expenses:

Selling Expenses$950

Administrative expenses670

Total Expenses$1,620

Operating Income$1,580

Other Revenues and (Expenses):

Interest Revenue0

Interest Expense(750)

Total Revenues and (Expenses)($750)

Income Before Taxes$830

Income Tax Expense150

Net Income$680

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