Vertical Analysis for Kellogg’s Refer to the financial statement information of Kellogg’s reprinted at the back of the book.

Required 1. Using the format in Exhibit 13-6, prepare common-size comparative income statements for 2006 and 2005. Use as the base “Net sales.” Round all percentages to the nearest one-tenth of a percent.

2. What changes do you detect in the income statement relationships from 2005 to 2006?

3. Using the format in Exhibit 13-5, prepare common-size comparative balance sheets at the end of 2004 and 2005. Round all percentages to the nearest one-tenth of a percent.

4. What observations can you make about the relative composition of Kellogg’s assets from the common-size statements? What observations can be made about the changes in the relative composition of liabilities and stockholders’ equity accounts?