Exercise 13-3A Horizontal and vertical analysis LO 13-1

Income statements for Zachary Company for Year 3 and Year 4 follow:

ZACHARY COMPANY Income Statements
	Year 4				Year 3
Sales	$	201,800			$	181,800
Cost of goods sold		143,600				121,600
Selling expenses		21,200				19,200
Administrative expenses		12,500				14,500
Interest expense		3,900				5,900
Total expenses	$	181,200			$	161,200
Income before taxes		20,600				20,600
Income taxes expense		5,100				3,600
Net income	$	15,500			$	17,000

Required a. Perform a horizontal analysis, showing the percentage change in each income statement component between Year 3 and Year 4. b. Perform a vertical analysis, showing each income statement component as a percentage of sales for each year.

Complete this question by entering your answers in the tabs below. Required A Required B Perform a horizontal analysis, showing the percentage change in each income statement component between Year 3 and Year 4. (Negative answers should be indicated by a minus sign. Round your answers to 1 decimal place. i.e., .234 should be entered as 23.4).) ZACHARY COMPANY Horizontal Analysis of Income Statements Percentage Change over Year 3 Sales % Cost of goods sold Selling expenses Administrative expenses Interest expense Total expenses Income before taxes Income taxes expense Net income (loss) % Required A Required B Perform a vertical analysis, showing each income statement component as a percentage of sales for each year. (Percentages may not add exactly due to rounding. Round your answers to 1 decimal place. (i.e., .234 should be entered as 23.4).) ZACHARY COMPANY Vertical Analysis of Income Statements Percentage of Percentage of Sales Year 4 Sales Year 3 Sales % % Cost of goods sold Selling expenses Administrative expenses Interest expense Total expenses Income before taxes Income taxes expense Net income % %