A horizontal and vertical analysis of the income statement for a service company providing consulting services is shown below.

Instructions

a. How effectively has the company controlled its operating expenses over the four-year period?

b. Identify any other income statement components that have significantly changed over the four-year period for the company.

c. Identify any additional information that might be helpful to you in your analysis of this company over the four-year period.

Taking It Further

Canada Goose Holdings Inc became a public corporation in March 2017. Can a meaningful horizontal and vertical analysis be prepared for its first full year of operations as a public company, the year ended March 31, 2018? Explain.

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COMFORT CORPORATION Horizontal Income Statement Year Ended January 31 2021 2020 2019 2018 Revenue 120.0% 110.0% 114.0% 100.0% Operating expenses Profit from operations Other revenues and expenses Interest expense Other revenue 118.6% 111.4% 114.3% 100.0% 123.3% 106.7% 113.3% 100.0% 40.0% 60.0% 80.0% 100.0% 240.0% 140.0% 200.0% 100.0% Profit before income tax 166.8% 130.2% 131.7% 100.0% 131.7% Income tax expense Profit 166.8% 130.2% 100.0% 166.8% 130.2% 131.7% 100.0% COMFORT CORPORATION Vertical Income Statement Year Ended January 31 2021 2020 2019 2018 Revenue 100.0% 100.0% 100.0% 100.0% Operating expenses 69.2% 70.9% 70.2% 70.0% Profit from operations Other revenues and expenses Interest expense 30.8% 29.1% 29.8% 30.0% (3.3)% (5.4)% (7.0)% (10.0)% Other revenue 1.0% 0.6% 0.9% 0.5% Profit before income tax 28.5% 24.3% 23.7% 20.5% Income tax expense 5.7% 4.9% 4.8% 4.1% Profit 22.8% 19.4% 18.9% 16.4%