Im having some trouble articultating this information and organizing it in the c
ID: 2486222 • Letter: I
Question
Im having some trouble articultating this information and organizing it in the correct fashion.
Vertical Analysis: Create a table with the same information as the separate statements with five columns: one for each year. The entries should be percentages based on Gross Income as a base.
Which items appear to have changed most over time?
How have earnings per Share changed?
Discuss why you might see these results.
Trend Analysis: Create a trend analysis by year of all lines in the reports.
Which lines have the strongest upward (or downward) trend?
Do these items seem to be related to Sales/Revenue? You need to support this discussion: you may compare these values with the graph you created earlier.
Explanation / Answer
. Vertical analysis:
gross income is the base, thus gross income for a year is 100% and other items for that year (as a percentage) have been calculated on the basis of gross income.
The item that has changed most over time is the net income. In 2009 it was 3.63% of gross income. It went to become -39.75% of gross income in 2013.
EPS:
EPS was 1.08 in 2009 (0.02% of gross income). It fell to - 5.57 in 2013 (-0.16% of gross income).
These results are being seen as the net income has fallen much more than the fall in sales as well as gross income during the period 2009 to 2013. This is being reflected in the EPS figures as well.
3. Trend analysis: The graph image as uploaded for question "1" above shows the trends for sales, gross income and net income.
As we can see from the graphs, it is the "net income" which is displaying the strongest downward trend.
Section 2: Report.
The vertical analysis of JC Penny's sales, gross income and net income shows that sales (as a % of gross income) has been rising steadily from 2009 to 2013. The reason is that the organization's gross income has seen a steady decline during this period. The decline in gross income is much higher than the decline in sales and as a result, sales (as a % of gross income) has shown a steady increase from 2009 to 2013.
Net income as a % of gross income has nosedived durung the period 2009 to 2013. This is because, net income has shown the steepest decline. This steep decline is also shown in the trend line of net income as displayed above.
Year 2009 2010 2011 2012 2013 Sales 18490 17560 17760 17260 12990 % 254.07% 255.16% 277.58% 319.36% 339.60% Gross Income 6450 60800 6190 5580 3170 % 100.00% 100.00% 100.00% 100.00% 100.00% Net income 567 249 378 -152 -985 % 3.63% 5.59% -2.44% -24.23% -39.75%