Posting - Income Statement; Notes to the FS
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Read the Notes to the Financial Statements (FS) for your SEC 10-K company. These "notes" are displayed after the financial statements.
1. Note 1 includes accounting information. What is the fiscal year for your SEC 10-K Company? This may be June 30 each year, or it may be the Sunday closest to the last day of January, or some other description.
2. Inventory: How is Inventory described for your SEC 10-K company? LIFO, FIFO, and/or average cost? Relate your answer to topics in our course.
3. Income Statement: Is it a single-step or multi-step income statement?
4. Calculate the Gross Profit and Gross Profit Percentage for this year and last year, creating a small table, such as the following:
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This Year
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Last Year
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Net Sales
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$1,200
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$1,400
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Cost of Goods Sold
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800
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1,200
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Gross Profit
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400
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200
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Gross Profit Percentage
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33%
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14%
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In the example above, sales decreased, gross profit increased, and the gross profit percentage increased. Therefore, sales are more profitable. We made 33 cents of gross profit on every dollar of sales this year, but only 14 cents of gross profit on every dollar of sales last year. Sales decreased, but sales are actually generating more profit overall, both as an absolute dollar value and as a percentage.
Your description may be different, but these are comments you might make for this posting and in your SEC 10-K paper and project.