The Interpublic Group of Companies income statement from its 1998 annual report is presented in Exhibit 5-4.

Required

a. Using the income statement, prepare a vertical common-size analysis for 1998, 1997, and 1996. Use gross income as the base.

b. Using the income statement, prepare a horizontal common-size analysis for 1998, 1997, and 1996. Use 1996 as the base.

c. Comment on significant trends that appear in

(a) and (b).

P5-5.

Change Analysis ItemYear 1 Year 2 Amount Percent 1 — 3,000 2 6,000 (4,000)

3 (7,000) 4,000 4 4,000 —

5 8,000 10,000 Required Determine the absolute change and the percentage for these items.

P5-6.

Change Analysis ItemYear 1 Year 2 Amount Percent 1 4,000 —

2 5,000 (3,000)

3 (9,000) 2,000 4 7,000 —

5 — 15,000 Required Determine the absolute change and the percentage for these items.