a

b

Vertical Analysis of Income Statement Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows: Sales Cost of goods sold Current Year $410,000 254,200 61,500 69,700 8,200 Previous Year $365,000 200,750 65,700 58,400 14,600 Selling expenses Administrative expenses Income tax expense a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers. Innovation Quarter Inc. Comparative Income Statement For the Years Ended December 31 Current year Amount Current year Percent Previous year Amount Previous year Percent Sales $410,000 $365,000 Cost of goods sold 254,200 200.750 65.700 Selling expenses Administrative expenses 61,500 69,700 58.400 Income tax expense b. The vertical analysis indicates that the cost of goods sold as a percent of sales expenses by 3 percentage points, and administrative expenses income as a percent of sales by 3 percentage points. by 7 percentage points, while selling by 1 percentage points. Thus, net Gross profi Income from operations Net income Total operating expenses increased decreased