Problem # 4 - Horizontal & Vertical Financial Analysis 44 Assume the average cost of computer equipment fell 22.5 percent between 2012 and 2013. Let's see whether these changes are reflected in the income statement of Computer Tycoon Inc. for the year ended December 31, 2013. 13 points Sales Revenues Cost of Goods Sold 2013 $100,000 55,000 2012 $126,000 65,000 01:28:13 45,000 61,000 Gross Profit Selling, General, and Administrative Expenses Interest Expense 32,000 32,000 300 280 Income before Income Tax Expense Income Tax Expense 12,700 3,150 28,720 5,902 Net Income $ 9,550 $ 22,818 Required: 1-a. Conduct a horizontal analysis by calculating the year-over-year changes in each line item, expressed in dollars and in percentages. (Round your "Percentage" to 1 decimal place. Any decrease in amounts should be indicated with minus sign) COMPUTER TYCOON, INC. Vertical Analysis of Income Statements For the Years Ended December 31 Change in Dollars Percentage 2012 $ % 2013 100,000 $ 55,000 45,000 32,000 % 126,000 65,000 61,000 32,000 280 % Sales revenues Costs of goods sold Gross profit Selling, general, and Administrative expenses Interest expense Income before income tax expense Income tax expense Net income % 300 % 28,720 % 12,700 3,150 9,550 % 5,902 22,818 $ $ % 2-a. Conduct a vertical analysis by expressing each line as a percentage of total revenues. (Round your answers to 1 decimal place. Input all amounts as positive values.) 2012 % % COMPUTER TYCOON, INC. Vertical Analysis of Income Statements For the Years Ended December 31 2013 Sales revenues $ 100,000 % Costs of goods sold 55,000 % Gross profit 45,000 % Selling, general, and Administrative expenses 32,000 % Interest expense 300 % Income before income tax expense 12,700 % Income tax expense 3,150 % Net income $ 9,550 % % % $ 126,000 65,000 61,000 32,000 280 28,720 5,902 $ 22,818 % % % $ % % 2-b. Excluding income tax, interest, and selling, general, and administrative expenses, did Computer Tycoon earn more profit per dollar of sales in 2013 compared to 2012? Yes O No