Comparative Income Statement

The comparative income statement is vital in comparing two income statements from the
same organization, but different durations or two distinct companies that may or may not be in
the same production line (Humpherys et al., 2011). The comparison that is being made is side-
by-side, and the main focus is to ascertain the percentage increase or decrease of the various
items that have been indicated (Varbanova and Beutels, 2020). In the process, the outcomes that
will be provided are practical and efficient for decision-making in the areas that are good
performing and those which require improvement (Fajar, 2021). The cost of goods sold by Apple
stands at 59.9%, while Best buys 77.6%. From the vertical analysis, company B appears to be
spending 17.6% excess on their cost of goods sold compared to Apple. Various elements can be

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used in making the comparison. For instance, it is possible to compare the cost of goods sold
between the companies or the value of assets.
In addition, Apple’s sales and administrative expenses are 6.1%, while Best buys 18.8%.
The outcome is an indication that Best Buy spends a total of 12.7% more on its cost of sales and
administration than Apple Inc. More so, the total operating expenses for Apple Inc. are 9.6%,
while those of Best Buy is 18.8%. Therefore, the latter company appear to be spending 9.3%
above the cost of their operating expenses than the formed. The operating income for Apple is
30.5%, while those of Best Buy is 3.6%. Hence, the result indicates that Apple has been
receiving 26.9% in excess as their operating income. Lastly, the cost of research and
development between Apple Inc. and Best Buy is 3.5% of the amount that is in excess.
However, the percentage of sales for both Apple Inc. and Best Buy stands at 100%.
Therefore, four main conclusions can be made from the comparative income statement. One is
that Apple Inc. has a higher operating income than Best Buy. Secondly. There is a low total
operating expense in Apple than in the situation for company B. thirdly, and there is a low
percentage for the cost of goods that have been sold for company A than in company B.
Therefore, based on the discussion, Apple Inc. appears to be financially stronger than Best Buy.

Apple Best Buy Change
Sales 100% 100% 0%
Cost of Sales 59.9% 77.6% (17.6%)
Gross Profits 40.1% 22.4% 17.6%
Selling General and
Administrative
Expenses

6.1% 18.8% (12.7%)

Research and
Development Expenses

3.5% 0% 3.5%

Operating Expenses 9.6% 18.8% (9.3%)
Operating Income 30.5% 3.6% 26.9%

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References

Fajar, A. (2021). Comparative Analysis of Financial Statements PT. Indofood Sukses Makmur
Tbk. International Journal of Multi-culture and multi-religious understanding, 8(3), 224.
Humpherys, S. L., Moffitt, K. C., Burns, M. B., Burgoon, J. K., & Felix, W. F. (2011).
Identification of fraudulent financial statements using linguistic credibility analysis.
Decision Support Systems, 50(3), 585-594.
Varbanova, V., & Beutels, P. (2020). Recent quantitative research on determinants of health in
high income countries: A scoping review. PloS one, 15(9)