Pronghorn Inc. and Culver Corporation are Canadian fertilizer companies. The following information has been taken from...

Pronghorn Inc. and Culver Corporation are Canadian fertilizer companies. The following information has been taken from their financial statements for the fiscal years ended December 31. All figures are in millions of dollars.

CULVER	2021	2020	2019
Net sales	$8,862.0	$4,544.1	$3,049.5
Gross profit	5,228.1	1,885.0	1,053.4
Profit	3,534.2	1,167.0	675.0

PRONGHORN	2021	2020	2019
Net sales	$9,217	$5,710	$4,306
Gross profit	3,590	1,694	885
Profit	1,193	410	36

1) Calculate both companies’ gross profit margin and profit margin for the years 2019 through 2021. (Round answers to 1 decimal place, e.g.52.7%.)

2)

Determine which company had the best performance for profitability in each year.

3) Using horizontal analysis, calculate the percentage change between the following years: 2019 and 2020; 2020 and 2021 for both companies. (Round answers to 1 decimal place, e.g.52.7%.)

4) Using the information in the horizontal analysis, identify the company that had the most improvement in net sales, gross profit margin and profit margin in 2020 and 2021.

Expert Solution


Part 1
CULVER
	(All Figures are in $ millions)
Particulars	2021	2020	2019
Net Sales	8,862.0	4,544.1	3,049.5
Gross Profit	5,228.1	1,885.0	1,053.4
Net Profit	3,534.2	1,167.0	675.0
Gross Profit Margin(Gross Profit / Net Sales)	59.0%	41.5%	34.5%
Net Profit Margin(Net Profit / Net Sales)	39.9%	25.7%	22.1%


PRONGHORN
	(All Figures are in $ millions)
Particulars	2021	2020	2019
Net Sales	9,217.0	5,710.0	4,306.0
Gross Profit	3,590.0	1,694.0	885.0
Net Profit	1,193.0	410.0	36.0
Gross Profit Margin(Gross Profit / Net Sales)	38.9%	29.7%	20.6%
Net Profit Margin(Net Profit / Net Sales)	12.9%	7.2%	0.8%

Part 2
Clearly CULVER has the best performance in terms of profitability.

Part 3
CULVER
Year ended 2019 and 2020
Horizontal Analysis

			Increase/(Decrease) in 2020
	2019	2020	Amount	Percentage
Net Sales Revenue	3,049.5	4,544.1	1,494.6	49.0%
Gross Profit	1,053.4	1,885.0	831.6	78.9%
Net Profit	675.0	1,167.0	492.0	72.9%

CULVER
Year ended 2020 and 2021
Horizontal Analysis

			Increase/(Decrease) in 2021
	2020	2021	Amount	Percentage
Net Sales Revenue	4,544.1	8,862.0	4,317.9	95.0%
Gross Profit	1,885.0	5,228.1	3,343.1	177.4%
Net Profit	1,167.0	3,534.2	2,367.2	202.8%


PRONGHORN
Year ended 2019 and 2020
Horizontal Analysis

			Increase/(Decrease) in 2020
	2019	2020	Amount	Percentage
Net Sales Revenue	4,306.0	5,710.0	1,404.0	32.6%
Gross Profit	885.0	1,694.0	809.0	91.4%
Net Profit	36.0	410.0	374.0	1038.9%

PRONGHORN
Year ended 2020 and 2021
Horizontal Analysis

			Increase/(Decrease) in 2021
	2020	2021	Amount	Percentage
Net Sales Revenue	5,710.0	9,217.0	3,507.0	61.4%
Gross Profit	1,694.0	3,590.0	1,896.0	111.9%
Net Profit	410.0	1,193.0	783.0	191.0%


Part 4
In terms of Net Sales - CULVER is improved it's sales much better than Pronghorn in both 2019/2020 and 2020/2021
In terms of Gross Profit - PRONGHORN has improved it's Gross profit much better than Culver in 2019/2020 but in 2020/2021 CULVER has improved better
In terms of Net Profit - PRONGHORN has improved it's Net profit much better than Culver in 2019/2020 but in 2020/2021 CULVER has improved better

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