Reference no: EM133139978

Question - a) Selected financial information for DMV Corp. for a? six-year period? follows:

(Amounts in thousands)	2020	2019	2018	2017	2016	2015
Net sales	$1,820	$1,775	$1,610	$1,725	$1,680	$1,590
Net income	148	128	91	136	118	96
Ending common shareholders' equity	958	876	774	692	634	618

1. Make a horizontal analysis to compare 2020 to 2019. Which accounts increased the? most?

2. Compute trend percentages for 2016 through 2020?, using 2015 as the base year.

3. From the above? data, what can we infer about expenses from 2015 through 2020??

b) The president of Ambrose Car? Parts, Inc. has asked you to compare the? company's profit performance and financial position with the averages for the industry. The accounting office has given you the? company's income statement and balance? sheet, as well as the industry average data for? competitors:

Ambrose Car Parts, Inc. Income Statement Compared with Industry AverageFor the Year Ended December 31, 2020
	Ambrose	Industry
	Car Parts	Average
Net sales	$781,000	100.00%
Cost of goods sold	526,394	65.8
Gross margin	254,606	34.2
Operating expenses	163,229	19.7
Operating income	91,377	14.5
Other expenses	6,248	0.4
Net income	$85,129	14.10%

 

Ambrose Car Parts, Inc. Balance Sheet Compared with Industry Average 31-Dec-20
	Ambrose	Industry
	Car Parts	Average
Current assets	$297,440	70.90%
Property, plant, and equipment	111,760	23.6
Intangible assets, Net	8,360	0.8
Other assets	22,440	4.7
Total assets	$440,000	100.00%
Current liabilities	$205,040	48.10%
Long-term liabilities	96,800	16.6
Total liabilities	301,840	64.7
Shareholders' equity	138,160	35.3
Total liabilities and shareholders' equity	$440,000	100.00%

1. Make a vertical analysis for Ambrose for both its income statement and balance sheet.

2. Compare the? company's gross margin percentage? (gross margin as a percent of net? sales) with the average for the industry. Comment on their investment in assets compared to the industry information shown.