Exercises 1. Perform a 2019 vertical analysis and a 2018-2019 horizontal analysis of the income statements for DMZ, LLC provided below. What areas of concern, if any, do these analyses highlight? Explain your answer. DMZ, LLC Income Statements For the Years Ended December 31, 2018, and December 31, 2019 2018 2019 Gross sales $ 1,045,623 $ 1,125,844 Less: Returns 10,546 10,995 Net sales 1,035,077 1.114.849 Less: Cost of goods sold 425,689 431,258 Gross profit 609,388 683,591 Less: Operating expenses. 308,119 313.774 Operating income 301.269 369,817 Less: Interest 12.251 11.602 Net income $ 358,215 2. Perform a 2019 vertical analysis and a 2018-2019 horizontal analysis of the balance sheets for DMZ, LLC provided below. What areas of concern, if any, do these analyses highlight? Explain your answer. DMZ, LLC Balance Sheets As of December 31, 2018, and December 31, 2019 2018 $ 28,421 Accounts receivable 225.019 Inventory 319.887 Prepaid insurance 3.500 Total current assets 576,827 Cash 2019 $ 1.274 333,558 321,006 3.750 659,588 Equipment Less: Accumulated depreciation Net fixed assets 385.000 21.150 363.850 385,000 63,450 321,550 Total assets $940,677 $981.138 Accounts payable Wages and payroll taxes payable Short-term portion of mortgage payable Total current liabilities $331.822 25.889 21,014 378,725 $401,693 26.145 20.085 447,923 Mortgage payable 245.000 224.915 Total liabilities Owner's equity 623.725 316,952 672,838 308.300 Total liabilities and owner's equity $940.677 $981.138