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Playing the Numbers Game

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Submitted By wmcb35
Words 301
Pages 2
William Brummell
Case 3 Playing The Numbers Game!!
Question #2

Jay is right, they should include a common size statement (vertical analysis) in the report. This analysis will allow Jay and Jack to compare common size income statement analysis is stating every line item on the income statement as a percentage of sales and the balance sheet in comparing everything to total assets. Since there is more than one year of financial data, you can compare income statements to see your financial progress. This type of analysis will let you see how the revenues and the spending on different types of expenses change from one year to the next. In addition it will allow you to compare two different companies of different sizes.
It also allows you to benchmark the company with it rivals. This helps create forecast as to where the company will be in the next coming years.

Income Statement
Plastichem Inc.

Every year sales has increased
2001 to 2002 sales increased by 123.1 million dollars
2002 to 2003 sales increased by 41.6 million dollars
2003 to 2004 sales increased by a staggering 3.7 million dollars which shows that sales started to become slow and stagnate

Cost of Sales
2001 to 2002 COS decreased by 1.65%
2002 to 2003 COS decreased by less than 1 percent (.64%)
2003 to 2004 COS increased by 11.88% from this data we see that the COS has decreased as a result of sales declining in the last few years.

Gross Operating Profits
2001 to 2002 GOP increased by 1.65%
2002 to 2003 GOP increased by less than 1 percent (.64%)
2003 to 2004 GOP decreased by 12.12%
From this data we see that profits have staggered and and slowed as a result of slaes slowing.

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