Question
In: Accounting
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.
Solutions
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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