Vertical analysis Obj. 7 Two income statements for Hemlock Company follow:

Hemlock Company Income Statements For the Years Ended December 31 20Y5 20Y4 Fees earned Expenses Net income

$ 725,000

(432,875)

$ 615,000

(356,700)

$ 290,000 $ 258,300

a. Prepare a vertical analysis of Hemlock Company’s income statements.

b. Does the vertical analysis indicate a favorable or an unfavorable change?

AppendixLO1