Question

Observe the trends over the three years and the changes to the common-size percents you calculated in problems #1 & #2 for the Korbin Company. Comment on those changes with regard to the increase or decrease of the elements and their relation to how they affected other elements on the statements, i.e., gross profit, total assets, etc. Include the actual data you calculated from the problems to support your comments. (Your answer should approximate one-half page and encompass a few paragraphs on each statement type.)

Answer 1

In analyzing the trends and changes in common-size percents for the Korbin Company over the three years, it is important to consider the impact of these changes on other elements of the financial statements, such as gross profit and total assets.

Step-by-step explanation:

Introduction

In analyzing the trends and changes in common-size percents for the Korbin Company over the three years, it is important to consider the impact of these changes on other elements of the financial statements, such as gross profit and total assets.

Profit Trend

According to the data provided in problem #1, the profit trend for the Korbin Company showed an increase in profits each year, with a significant drop in profits during 2008 and 2009. However, the profit trend has since continued to increase each year, although at a less consistent rate.

Impact on Other Elements

The changes in profit have a direct impact on other elements of the financial statements. For example, an increase in profit would result in higher gross profit, while a decrease in profit would lead to a decrease in gross profit. Similarly, total assets are also affected by changes in profit, as higher profit would result in an increase in total assets.

Overall, it is important to analyze the trends and changes in common-size percents for the Korbin Company in order to understand how these changes impact other elements of the financial statements, such as gross profit and total assets.