Login

Case Study: XYZ Manufacturing Company–Horizontal and Vertical AnalysisBackground:XYZ Manufacturing Company is a mid-sized firm that...

60.1K

Verified Solution

Question

Accounting

Case Study: XYZ Manufacturing Company
$-$
Horizontal and Vertical Analysis
Background:
XYZ Manufacturing Company is a mid
$-$
sized firm that produces industrial equipment. The
company
$’$
s management is concerned about its financial performance over the last three
years and has asked its accounting department to perform both horizontal and vertical
analysis on its financial statements to assess the financial health and identify key trends.
Below are selected financial data from XYZ
$'$
s income statement for the last three years:
Item
$2021 2022 2023$
Sales Revenue $
$800$
$,$
$000$
$
$900$
$,$
$000$
$
$1$
$,$
$050$
$,$
$000$
Cost of Goods Sold
$($
COGS
$)$
$
$500$
$,$
$000$
$
$600$
$,$
$000$
$
$720$
$,$
$000$
Gross Profit $
$300$
$,$
$000$
$
$300$
$,$
$000$
$
$330$
$,$
$000$
Operating Expenses $
$100$
$,$
$000$
$
$120$
$,$
$000$
$
$150$
$,$
$000$
Operating Income $
$200$
$,$
$000$
$
$180$
$,$
$000$
$
$180$
$,$
$000$
Interest Expense $
$10$
$,$
$000$
$
$10$
$,$
$000$
$
$15$
$,$
$000$
Net Income $
$190$
$,$
$000$
$
$170$
$,$
$000$
$
$165$
$,$
$000$
Required:
$1$
$.$
What specific trend is most concerning in the horizontal analysis, and why
might it be problematic for XYZ Manufacturing Company in the long run?
$(5$
marks
$)$
$2$
$.$
Despite an increase in sales revenue, the net income has decreased. What does
this tell you about XYZ
$’$
s overall financial strategy and its ability to maintain
profitability?
$(5$
marks
$)$
$,$
conduct a vertical and horizantal analysis for this and show me how you solved it step by step

Answer & Explanation Solved by verified expert

answer-section

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Other questions asked by students

1 Answer

$0.99

~~$1.99~~

(Save $1 )

One time Pay

No Ads
Answer to 1 Question
Get free Zin AI - 50 Thousand Words per Month

Best

Unlimited

$4.99*

~~$9.99~~

(Save $5 )

Billed Monthly

No Ads
Answers to Unlimited Questions
Get free Zin AI - 3 Million Words per Month

*First month only

Free

$0

Get this answer for free!
Sign up now to unlock the answer instantly

You can see the logs in the Dashboard.

Sign In

Don't have an account? Sign Up