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2 0 1 8 2 0 1 7 Analysis / Explaination Units 8 0 . 0 6 2 . 5 Sales 1 , 2 0

20182017 Analysis/Explaination
Units 80.062.5
Sales 1,200100%1,000100%
COGS 720500
Gross Profit 480500
Selling Expense 204250
Administrative Expense 216150
Operating Income 60100
Other Income(Expense)84-
Net Income 144100
Required:
Using vertical analysis, evaluate the results of operations in 2017 and 2018. Quantify the percentages of each line item to sales.
Evaluate the drivers of net income, including gross profit, selling and administrative expenses, and other income. What is the
overall percentage point change in profitability and what is the contribution (positive or negative) of each driver. Explain the
effect of each driver on profitability and the possible scenarios of each based on the data above. Which are areas of concern?
Which areas are positive? What additional questions would you have?

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