Question

The Income Statement for XYZ Company for 2016 and 2017 is as follows:

2017
Sales $4,000,000

Cost of Goods Sold 2,500,000 Gross Profit 1,500,000 Selling Expense 600,000 Administrative Expense 200,000 Total Operating Expense 800,000 Income from Operations 700,000 Income Tax Expense 50,000 Net Income 650,000

2016 $3,500,000 2,400,000 1,100,000 700,000 150,000 850,000 250,000 20,000 230,000

Instructions: Using the above comparative horizontal analysis for ABC Company.

Answer 1

Ans.	XYZ COMPANY
	Horizontal   Analysis   Of   Income   Statement
				Change
	Particulars	2016	2017	in Amount	in Percentage (%)
	Sales	4000000	3500000	-500000	-12.50%
	Cost of goods sold	2500000	2400000	-100000	-4.00%
	Gross Profit	1500000	1100000	-400000	-26.67%
	Selling expenses	600000	700000	100000	16.67%
	Administrative expenses	200000	150000	-50000	-25.00%
	Total operating expenses	800000	850000	50000	6.25%
	Income from operations	700000	250000	-450000	-64.29%
	Income tax expenses	50000	20000	-30000	-60.00%
	Net income	650000	230000	-420000	-64.62%
	*Change in Amount = Particular amount of current year 2017 - Particular amount of previous year 2016
	*Change in percentage =   Change in amount / particular amount of previous year 2016 * 100
	*The negative sign (-) shows the decrease in amount and percentage in current year from previous year.