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Homework DMZ LLC Vertical and Horizontal Analysis
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Answer these two questions.
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Name Course
Instructor Date
DMZ LLC Vertical and Horizontal Analysis
Question 1
Income statement Vertical Analysis
DMZ LLC
Income Statements
For The Years Ended 31 December, 2018 and Ended 31 December 31, 2019
2018
2019
2018
2019
Gross sales
$1,045,623
$1,125,844
100%
100%
Less: Returns
10,546
10,995
1.01%
0.98%
Net sales
1,035,077
1,114,849
98.99%
99.02%
Less: Cost of goods sold
425,689
431,258
40.71%
38.31%
Gross profit
609,388
683,591
58.28%
60.72%
Less: Operating expenses
308,119
313,774
29.47%
27.87%
Operating income
301,269
369,817
28.81%
32.85%
Less: interest
12,251
11,602
1.17%
1.03%
Net income
$289,018
$358,215
27.64%
31.82%
Income statement Horizontal Analysis
DMZ LLC
Income Statements
For The Years Ended 31 December, 2018 and Ended 31 December 31, 2019
% change (2018-2019)
Gross sales
7.67%
Less: Returns
4.26%
Net sales
7.71%
Less: Cost of goods sold
1.31%
Gross profit
12.18%
Less: Operating expenses
1.84%
Operating income
22.75%
Less: interest
-5.30%
Net income
23.94%
Vertical analysis consists of determining the proportional weight (in percentage) that each account has within the analyzed financial statement. This allows determining the composition and structure of the financial statement. Horizontal analysis determines the growth or decrease of an account in a given period and the analysis allows to determine if the behavior. In horizontal analysis, there was increase in returns by 4.26% in the years 218 to 2019, but the share of returns to sales revenue was 1.01% in2018 and 0.98% n 2019. There was also a 1.84% increase in the operating expenses, but this was offset by a higher percentage increase in the gross profit
Question 2
Balance Sheet Vertical Analysis
DMZ LLC
Income Statements
For The Years Ended 31 December, 2018 and Ended 31 December 31, 2019
2018
2019
2018
2019
Cash
$28,421.00
$1,274.00
3.02%
0.13%
Accounts Receivable
225,019
333,558
23.92%
34.00%
Inventory
319,887
321,006
34.01%
32.72%
Prepaid Insurance
3,500
3,750
0.37%
0.38%
Total current assets
576,827
659,588
61.32%
67.23%
Updated on
Instructor Date
DMZ LLC Vertical and Horizontal Analysis
Question 1
Income statement Vertical Analysis
DMZ LLC
Income Statements
For The Years Ended 31 December, 2018 and Ended 31 December 31, 2019
2018
2019
2018
2019
Gross sales
$1,045,623
$1,125,844
100%
100%
Less: Returns
10,546
10,995
1.01%
0.98%
Net sales
1,035,077
1,114,849
98.99%
99.02%
Less: Cost of goods sold
425,689
431,258
40.71%
38.31%
Gross profit
609,388
683,591
58.28%
60.72%
Less: Operating expenses
308,119
313,774
29.47%
27.87%
Operating income
301,269
369,817
28.81%
32.85%
Less: interest
12,251
11,602
1.17%
1.03%
Net income
$289,018
$358,215
27.64%
31.82%
Income statement Horizontal Analysis
DMZ LLC
Income Statements
For The Years Ended 31 December, 2018 and Ended 31 December 31, 2019
% change (2018-2019)
Gross sales
7.67%
Less: Returns
4.26%
Net sales
7.71%
Less: Cost of goods sold
1.31%
Gross profit
12.18%
Less: Operating expenses
1.84%
Operating income
22.75%
Less: interest
-5.30%
Net income
23.94%
Vertical analysis consists of determining the proportional weight (in percentage) that each account has within the analyzed financial statement. This allows determining the composition and structure of the financial statement. Horizontal analysis determines the growth or decrease of an account in a given period and the analysis allows to determine if the behavior. In horizontal analysis, there was increase in returns by 4.26% in the years 218 to 2019, but the share of returns to sales revenue was 1.01% in2018 and 0.98% n 2019. There was also a 1.84% increase in the operating expenses, but this was offset by a higher percentage increase in the gross profit
Question 2
Balance Sheet Vertical Analysis
DMZ LLC
Income Statements
For The Years Ended 31 December, 2018 and Ended 31 December 31, 2019
2018
2019
2018
2019
Cash
$28,421.00
$1,274.00
3.02%
0.13%
Accounts Receivable
225,019
333,558
23.92%
34.00%
Inventory
319,887
321,006
34.01%
32.72%
Prepaid Insurance
3,500
3,750
0.37%
0.38%
Total current assets
576,827
659,588
61.32%
67.23%
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