eBook Show Me How Vertical analysis of income statement Instructions Income Statement Final Question Instructions Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows: Previous Year Current Year $ 4,000,000 Sales $3,600,000 2,280,000 1,872,000 648,000 Cost of goods sold Selling expenses Administrative expenses Income tax expense 600,000 520,000 240,000 360,000 216.000 A Prepare an income statement in comparative form, stating each item for both years as a percent of sales. Enter all amounts as positive numbers B. Comment on the significant changes disclosed by the comparative income statement Income Statement Ro Innovation Quarter Inc. Comparative Income Statement For the Years Ended December 31 1 Current year Current year Previous year Previous year 2 Amount Percent Amount Percent $ Sales $4,000,000.00 2.280,000.00 $3,600,000.00 1,872,000.00 4 Cost of goods sold $1.720,000.00 $1,728,000.00 5 Gross profit Selling expenses 7 Administrative expenses 600,000.00 648,000.00 520,000.00 560,000.00 $1,120,000.00 $1,008,000.00 Total operating expenses Income from operations 600,000.00 720,000.00 240,000.00 216,000.00 10 Income tax expense $504,000.00 11 Net income $360,000.00 Check My Work Final Question Comment on the significant changes disclosed by the comparative Income statement The vertical analysis indicates that the cost of goods sold as a percent of sales by 6 percentage points, while selling expenses points, and administrative expenses by a percentage points. Thus.net Income as a percent of by 5 percentage points by 3 percentage decreased increased