- Calculate the 2007 cost of goods sold.
- Calculate the 2006 gross profi t.
- Calculate the 2007 gross profi t.
- Calculate the 2006 operating expenses.
- Calculate the 2007 operating expenses.
- Calculate the 2006 net income.
- Calculate the 2007 net income.
- Calculate the percent that would be used in a horizontal analysis of the company’s wages, salaries, and benefi ts.
- Calculate the percent that would be used in a horizontal analysis of the company’s EBIT.
- Calculate the percent that would be used in a vertical analysis of the company’s 2006 cost of goods sold.
- Calculate the percent that would be used in a vertical analysis of the company’s 2007 net income.
- By what percent did the company’s returns change from 2006 to 2007?
- By what percent did the company’s sales discounts change from 2006 to 2007?
E. Additional Exercise
- Joe did a vertical analysis of his company’s fi nancial statements, and calculated that the cost of goods sold was 59.4%
of sales. Later, though, he realized that he accidentally used gross sales instead of net sales in this calculation. His
company had no cash discounts, but did have returns amounting to 5.85% of gross sales. What should the cost of
goods sold percent actually have been?
12.2 Balance Sheets
Income statements show the financial performance of a business over some period of time.
They show profits, losses, expenses, and so on, but give no insight into the financial posi-
tion of the business in terms of the value of what it owns or the total of its debts. Balance
sheets are a type of financial statement used to consider the overall financial condition of
the business from that point of view.498 Chapter 12 Financial Statements