Question

Consolidated financial statements for Initech Corporation follow.
Initech Corporation
Consolidated Balance Sheets
(In millions except per share amounts)
LIABILITIES AND STOCKHOLDERS’ EQUITY

Required:
1. Prepare common size income statements to be used for both vertical and horizontal analysis for 2010–2011 (in percentage terms, rounded to two decimal places). You do not need to include the actual dollar amounts shown above.
2. Using the common size income statements for both vertical and horizontal analysis prepared in part 1, indicate why Initech’s profits increased more rapidly than sales for 2010 and 2011.
3. Prepare common size balance sheets for vertical analysis for 2010 and 2011 (in percentage terms, rounded to two decimal places). You do not need to include the actual dollar amounts shown above.
4. Did the proportion of assets invested in the various classes of assets change significantly from 2010 to 2011?
5. How has Initech financed its growth in assets?
6. Did the income statement change as much between 2010 and 2011 as the balance sheet?


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  • CreatedSeptember 22, 2015
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