Prepare a horizontal analysis of the comparative income statement of McCormick Designs, Inc.

Exercise 1

Performing horizontal analysis—income statement

Data for McCormick Designs, Inc. follow:

Instructions

Prepare a horizontal analysis of the comparative income statement of McCormick Designs, Inc. Round percentage changes to one decimal place.

Why did 2016 net income increase by a higher percentage than net sales revenue?

Exercise 2

Performing vertical analysis of a balance sheet

Tri Designs, Inc. has the following data:

Perform a vertical analysis of Tri Designs’s balance sheet for each year.

Exercise 3

Computing key ratios

The financial statements of Victory’s Natural Foods include the following items:

Compute the following ratios for the current year:

Current ratio

Cash ratio

Acid-test ratio

Inventory turnover

Days’ sales in inventory

Days’ sales in receivables

Gross profit percentage (assume all sales are on credit)

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