HG Lang Designs operates an exclusive bridal boutique in Manhattan. All gowns are designed by Lang but are manufactured by various small firms in France and Italy. The following financial information for the company relates to Problems 1 through 4.

Assume you are the vice president of operations for HG Lang and you are preparing for a meeting to discuss the 2009 financial results with Adrienne Aiello, the company president.

Required
a. Prepare a vertical analysis of the income statements for 2008 and 2009. Based on this analysis, what is Adrienne Aiello likely to focus on in your upcoming meeting?
b. During 2009, the company had price increases from its European gown manufacturers. Ms. Aiello has asked you to estimate what the gross margin would have been for 2009 if the price increase had not occurred.

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HG Lang Designs Balance Sheets Assets Current assets: Cash Accounts receivable Inventory Other current assets Total current assets Buildings, furniture, and fixtures, net Total assets December 31, 2009 December 31, 2008 $ 62,541 $ 84,584 338,652 1,725,425 59,859 2,186,477 1,548,942 $ 3,735,419 320,378 1,695,785 62,587 2,163,334 1,548,942 $ 3,712,276