Corporate Financial Accounting
15th Edition
ISBN: 9781337398169
Author: Carl Warren, Jeff Jones
Publisher: Cengage Learning
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Question
Chapter 3, Problem 3.1MAD
(a)
To determine
To prepare: Vertical analysis of income statements for the year ended Year 1 and Year 2 of Incorporation A
(b)
To determine
To indicate: The trend of operating income as per the vertical analysis prepared in Part (a)
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Analyze and compare Amazon.com, Best Buy, and Walmart
The condensed income statements through operating income for Amazon.com, Inc. (AMZN), Best Buy Co., Inc. (BBY), and Walmart Inc. (WMT) for a recent fiscal year follow (in millions):
Line Item Description
Amazon
Best Buy
Walmart
Sales
$280,522
$43,638
$523,964
Cost of sales
(165,536)
(33,590)
(394,605)
Gross profit
$114,986
$10,048
$129,359
Selling, general, and administrative expenses
(100,244)
(7,998)
(108,791)
Operating expenses
(201)
(41)
0
Operating income
$14,541
$2,009
$20,568
Question Content Area
1. Prepare comparative common-sized income statements for each company. Round percentages to one decimal place. If percentages is zero, enter "0". For those boxes in which you must enter subtractive or negative numbers use a minus sign. (Example: -300)
Comparative Income statements
Line Item Description
Amazon
Best Buy
Walmart
Sales
Sales%
Sales%
Sales%
Cost of sales
Cost of sales%
Cost of…
Vertical analysis
Amazon.com, Inc. is the largest Internet retailer in the United States. Amazon’s income statements through income from operations for two recent years are as follows (in millions):
Amazon.com, Inc.
Operating Income Statements
For the Years Ended December 31
(in millions)
Year 2
Year 1
Product sales
$70,080
$60,903
Service sales
18,908
13,549
Total sales
$88,988
$74,452
Cost of sales
$62,752
$54,181
Fulfillment
10,766
8,585
Marketing
4,332
3,133
Technology and content
9,275
6,565
General and administrative
1,552
1,129
Other operating expense (income), net
133
114
Total operating expenses
$88,810
$73,707
Income from operations
$178
$745
Required:
a. Prepare a vertical analysis of the two operating income statements. Round percentages to one decimal place.
Vertical analysis
Amazon.com, Inc. is the largest Internet retailer in the United States. Amazon’s income statements through income from operations for two recent years are as follows (in millions):
Amazon.com, Inc.
Operating Income Statements
For the Years Ended December 31
(in millions)
Year 2
Year 1
Product sales
$70,080
$60,903
Service sales
18,908
13,549
Total sales
$88,988
$74,452
Cost of sales
$62,752
$54,181
Fulfillment
10,766
8,585
Marketing
4,332
3,133
Technology and content
9,275
6,565
General and administrative
1,552
1,129
Other operating expense (income), net
133
114
Total operating expenses
$88,810
$73,707
Income from operations
$178
$745
Required:
a. Prepare a vertical analysis of the two operating income statements. Round percentages to one decimal place.
Amazon.com, Inc.
Operating Income Statements
For the Years Ended December 31 (in millions)
Year 2
Year 1
Amount
Percent
Amount
Percent
Product sales…
Chapter 3 Solutions
Corporate Financial Accounting
Ch. 3 - How are revenues and expenses reported on the...Ch. 3 - Is the matching concept related to (A) the cash...Ch. 3 - Why are adjusting entries needed at the end of an...Ch. 3 - What is the difference between adjusting entries...Ch. 3 - Identify the four different categories of...Ch. 3 - If the effect of the debit portion of an adjusting...Ch. 3 - If the effect of the credit portion of an...Ch. 3 - Prob. 8DQCh. 3 - Prob. 9DQCh. 3 - (A) Explain the purpose of the two accounts:...
Ch. 3 - Account requiring adjustment Indicate with a Yes...Ch. 3 - Type of adjustment Classify the following items as...Ch. 3 - Adjustment for accrued revenues At the end of the...Ch. 3 - Adjustment for accrued expense Prospect Realty Co....Ch. 3 - Adjustment for unearned revenue On June 1, 20Y2,...Ch. 3 - Adjustment for prepaid expense The prepaid...Ch. 3 - Adjustment for depreciation The estimated amount...Ch. 3 - Effect of omitting adjustments For the year ending...Ch. 3 - Effect of errors on adjusted trial balance For...Ch. 3 - Vertical analysis Two income statements for Cornea...Ch. 3 - Prob. 3.1EXCh. 3 - Classifying adjusting entries The following...Ch. 3 - Adjusting entry for accrued fees At the end of the...Ch. 3 - Effect of omitting adjusting entry The adjusting...Ch. 3 - Adjusting entries for accrued salaries Paradise...Ch. 3 - Determining wages paid The wages payable and wages...Ch. 3 - Effect of omitting adjusting entry Accrued...Ch. 3 - Effect of omitting adjusting entry When preparing...Ch. 3 - Adjusting entries for unearned fees The balance in...Ch. 3 - Effect of omitting adjusting entry At the end of...Ch. 3 - Adjusting entry for supplies The balance in the...Ch. 3 - Determining supplies purchased The supplies and...Ch. 3 - Effect of omitting adjusting entry At March 31,...Ch. 3 - Adjusting entries for prepaid insurance The...Ch. 3 - Adjusting entries for prepaid insurance The...Ch. 3 - Adjusting entries for unearned and accrued fees...Ch. 3 - Prob. 3.17EXCh. 3 - Adjustment for depreciation The estimated amount...Ch. 3 - Determining fixed assets book value The balance in...Ch. 3 - Prob. 3.20EXCh. 3 - Effects of errors on financial statements For a...Ch. 3 - Effects of errors on financial statements For a...Ch. 3 - Effects of errors on financial statements The...Ch. 3 - Effects of errors on financial statements If the...Ch. 3 - Prob. 3.25EXCh. 3 - Adjusting entries from trial balances The...Ch. 3 - Corrected trial balance totals, 369,000 Adjusting...Ch. 3 - Adjusting entries On March 31, the following data...Ch. 3 - Prob. 3.2APRCh. 3 - Adjusting entries Trident Repairs Service, an...Ch. 3 - Adjusting entries Good Note Company specializes in...Ch. 3 - Adjusting entries and adjusted trial balances...Ch. 3 - Adjusting entries and errors At the end of April,...Ch. 3 - Adjusting entries On May 31, the following data...Ch. 3 - Adjusting entries Selected account balances before...Ch. 3 - Adjusting entries Crazy Mountain Outfitters Co.,...Ch. 3 - Adjusting entries The Signage Company specializes...Ch. 3 - Adjusting entries and adjusted trial balances...Ch. 3 - Adjusting entries and errors At the end of August,...Ch. 3 - Continuing Problem 3. Total of Debit column:...Ch. 3 - Prob. 3.1MADCh. 3 - Analyze Pandora Media Pandora Media, Inc. (P)...Ch. 3 - Analyze World Wrestling Entertainment World...Ch. 3 - Prob. 3.4MADCh. 3 - Prob. 3.5MADCh. 3 - Analyze and Compare ATT and Verizon Communications...Ch. 3 - Prob. 3.1TIFCh. 3 - Loan application Daryl Kirby opened Squid Realty...Ch. 3 - Prob. 3.4TIFCh. 3 - Prob. 3.5TIF
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