11 PROBLEM ONE (30 pts.) Given on page 13 is the income statement for Apple Industries for the FYE (fiscal year ended) 12/31/89, 12/31/90, and 12/31/91. Apple Industries is a manufacturer of specialty computer chips for the Micro and Mini Computer Industry. During the last several years, the firm has been replacing much of its labor intensive factory with robotie technology For the problem, the following is required: 1. Common size" the financial information of the three years placing the correct percentage amount into the proper box. 2. Answer the related questions below. Please expound on each question where indicated. QUESTIONS: 1. What is the percentage increase in Net Sales between 1989-1990 and 1990-19917 1989-1990 1990-1991 2. What trend do you see in the Cost of Goods Sold account? (Expound) 3. What possible explanation do you advance for this trend? (Expound) 12 What is the trend with respect to the operating expenses? (Expound) 5. Has one element contributed more to this trend in operating expenses. Which One ? 6. What trend do you see in the Net Profit amounts? (Expound) 7. What item (items) have contributed to this trend? (Expound) Apple Industries Inc. Income Statement for the 12 months ended Dec, 31, 1989, 1990. 1991 (in 000's) 1989 Common 1990 Common 1991 Size Size (e) (%) Common Size (8) $3.000 $4,000 $5,000 NET SALES Less Cost of Goods Sold Gross Profit 2.610 $ 390 3.400 600 4.000 $1,000 111 11 90 150 120 160 150 150 11111111 111 1111 $ 240 $ Operating Expenses Selling Expenses General & Admin. Total Operating Expenses Operating Margin Other Expenses Interest Exp. Earnings Before Taxes Taxes (508) Net Profit 280 $ 300 $ 150 $ 320 $ 700 $ 30 $ 40 $ 50 $ 120 60 $ 60 $ 280 140 $ 140 $ 650 325 325