Q2SE - Horngren'S Financial And Managerial Accounting

Question

Verifine Corp. reported the following on its comparative income statement:

(In millions) 2019 2018 2017

Revenue \( 9,890 \) 9,690 $ 9,135

Cost of Goods Sold 6,250 6,000 5,890

Prepare a horizontal analysis of revenues and gross profit—both in dollar amounts

and in percentages—for 2019 and 2018.

Step-by-Step Solution

Answer

Answer

For 2019 Revenue Increases by 200& 2.06% and COGS Increases by 250 &4.17%

for 2018 Revenue Increases by 555 & 6.08% and COGS Increases by 110 & 1.87%

Step 1: Horizontal analysis for 2019

	2019 (A)	2018 (B)	Increase/ decrease  (C=A-B)	Percentage Increase/ Decrease (C/B)
Revenue	9,890	9,690	200	2.06%
Cost of Goods Sold	6,250	6,000	250	4.17%

Step 2: Horizontal analysis for 2018

	2018 (A)	2017 (B)	Increase/ decrease  (C=A-B)	Percentage Increase/ Decrease (C/B)
Revenue	9,690	9,135	555	6.08%
Cost of Goods Sold	6,000	5,890	110	1.87%