Question
In: Accounting
Prepare a horizontal analysis of revenues and gross profit—both in dollar amounts and in percentages—for 2019...
Prepare a horizontal analysis of revenues and gross profit—both in
dollar amounts and in percentages—for 2019 and 2018.
In millions)
2019 2018 2017
Revenue $9,575 $9,300 $8,975
Cost of Goods Sold 6,250 6,000 5,890
Begin by calculating the gross profit for each year, then prepare a horizontal analysis of revenues and gross profit—both in dollar amounts and in percentages—for 2019 and 2018. (Enter amounts in millions as provided to you in the problem statement. Round the percentages to one decimal place, X.X%. Use a minus sign or parentheses to indicate a decrease.)
Solutions
Expert Solution
(a)
Gross Profit for 2019 = $3325
Gross Profit for 2018 = $3300
Calculation of Gross Profit:
| Particulars | 2019 | 2018 | 2017 |
| Revenue (a) | 9,575 | 9,300 | 8,975 |
| Cost of Goods Sold (b) | 6,250 | 6,000 | 5,890 |
| Gross Profit (a - b) | 3,325 | 3,300 | 3,085 |
(b)
There has been decrease in Revenue during 2019 as compared to 2018. The total increase in revenue during 2019 is $275 against $325 during 2018. In percentage terms, the increase in revenue during 2019 is 3.0% against 3.6% during 2018.
Further, There has been decrease in Gross Profit during 2019 as compared to 2018. The total increase in gross profit during 2019 is $25 against $215 during 2018. In percentage terms, the increase in gross profit during 2019 is 0.8% against 7.0% during 2018.
Analysis:
| Particulars | 2019 | 2018 | ||
|
Increase / (Decrease) in Revenue (c) Formula: Revenue in Current Year - Revenue in previous year |
(9575 - 9300) | 275 | (9300 - 8975) | 325 |
| %
Increase / (Decrease) in Revenue Formula: Increase in Revenue as per (c) / Revenue during previous year |
(275 / 9300) | 3.0% | (325 / 8975) | 3.6% |
| Increase
/ (Decrease) in Gross Profit (d) Formula: Gross Profit in Current Year - Gross Profit in previous year |
(3325 - 3300) | 25 | (3300 - 3085) | 215 |
| %
Increase / (Decrease) in Gross Profit Formula: Increase in Gross Profit as per (d) / Gross Profit during previous year |
(25 / 3300) | 0.8% | (215 / 3085) | 7.0% |
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