Exercise 12-61 Horizontal Analysis of Income Statements 1. Prepare common size i

Question

Exercise 12-61
Horizontal Analysis of Income Statements

1. Prepare common size income statements for horizontal analysis. Enter your answers in percentage terms, rounded to two decimal places, and do not include the "%" sign with your answer. For example, "100.00" or "28.72". Use minus sign to enter negative values. You do not need to include the actual dollar amounts shown above. If an amount is zero, enter "0".

Karofsky Computer Inc.

Consolidated Income Statements

   

   

2011

2010

2009

  

  %

  %

  %

Costs and expenses:

  

  %

  %

  %

  

  %

  %

  %

  

  %

  %

  %

  

  %

  %

  %

  %

  %

  %

  

  %

  %

  %

  

  %

  %

  %

  

  %

  %

  %

  

  %

  %

  %

Net income

  %

  %

  %

  

  %

  %

  %

1. Prepare common size income statements for horizontal analysis. Enter your answers in percentage terms, rounded to two decimal places, and do not include the "%" sign with your answer. For example, "100.00" or "28.72". Use minus sign to enter negative values. You do not need to include the actual dollar amounts shown above. If an amount is zero, enter "0".

Karofsky Computer Inc.

Consolidated Income Statements

   

   

2011

2010

2009

  

  %

  %

  %

Costs and expenses:

  

  %

  %

  %

  

  %

  %

  %

  

  %

  %

  %

  

  %

  %

  %

  %

  %

  %

  

  %

  %

  %

  

  %

  %

  %

  

  %

  %

  %

  

  %

  %

  %

Net income

  %

  %

  %

  

  %

  %

  %

Explanation / Answer

1) Karofsky Computer Inc.

Consolidated Income Statements (in %)

Working Notes:-

The amounts of all items in income statement of year 2009 is taken as base (i.e. equal to 100%) for calculating percentage of all items of year 2010 and 2011. For example, sales percentage for 2010 is calculated as follows:-

2010 % = 2010 Sales/2009 Sales = $7,976,954/$7,086,542 = 1.1256 or 112.56%

Similarly Sales in % of 2010 and percentage of all other items for 2010 and 2011 is calculated.

Particulars 2011 2010 2009 Sales 129.66 112.56 100.00 Costs and expenses: Cost of goods sold 171.49 131.51 100.00 Research and development 93.72 110.37 100.00 Selling, general and administrative 82.03 96.75 100.00 Restructuring costs and other NA NA 0 137.99 125.25 100.00 Operating Income 64.81 13.69 100.00 Interest and other income, net -44.30 59.07 100.00 Income before income taxes 58.48 16.33 100.00 Provision for income taxes 58.48 16.33 100.00 Net Income 58.48 16.33 100.00 Common and common equivalent shares used in the calculations of earnings per share 96.93 97.25 100.00

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