A condensed income statement for Simultech Corporation and a partially completed

Question

A condensed income statement for Simultech Corporation and a partially completed vertical analysis are presented below.

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Required 1. Complete the vertical analysis by computing each missing line item as a percentage of sales revenues. (Round your answers to the nearest whole percent.) SIMULTECH CORPORATION Income Statement (summarized) (in millions of U.S. dollars) For the Years Ended January 31, 2013 January 31, 2012 $ 2,070 1,577 393 52 20 28 100 % Sales Revenues Cost of Goods Sold Selling, General, and Administrative Expenses Other Operating Expenses Interest Expense Income before Income Tax Expense Income Tax Expense Net Income 100% $ 2,360 1,781 406 12 20 141 28 113 76 17 0

Explanation / Answer

Income Statement(summarized)

(in million of US dollars)

January 31 2013

January 31 2012

Sales Revenue

2,070

            100.00

%

$2,360

           100.00

%

Cost of Goods sold

1,577

               76.18

%

1781

             75.47

%

Selling,General and administrative expenses

393

               18.99

%

406

             17.20

%

Other Operating expenses

52

                 2.51

%

12

                0.51

%

Interest expenses

20

                 0.97

%

20

                0.85

%

Income before Income tax expenses

28

                 1.35

%

141

                5.97

%

Income Tax Expenses

6

                 0.29

%

28

                1.19

%

Net Income

22

                 1.06

%

113

                4.79

%

2) The percentage of cost of goods sold increased. So performance is worse.

3) The percentage of net income is decreased. So net profit margin has decreased over the two years.

Income Statement(summarized)

(in million of US dollars)

January 31 2013

January 31 2012

Sales Revenue

2,070

            100.00

%

$2,360

           100.00

%

Cost of Goods sold

1,577

               76.18

%

1781

             75.47

%

Selling,General and administrative expenses

393

               18.99

%

406

             17.20

%

Other Operating expenses

52

                 2.51

%

12

                0.51

%

Interest expenses

20

                 0.97

%

20

                0.85

%

Income before Income tax expenses

28

                 1.35

%

141

                5.97

%

Income Tax Expenses

6

                 0.29

%

28

                1.19

%

Net Income

22

                 1.06

%

113

                4.79

%

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