Falls Jewelry Co.
Income Statement
For the year ended December 31
(000s)			2021		2022
Sales - All on Credit			$ 500,000		$ 565,000
Cost of Goods Sold			220,000		226,000
	Gross Profit		280,000		339,000
Salaries Expense			120,000		170,000
Advertising Expense			40,000		36,000
Depreciation Expense			13,000		16,000
IT Expenses			7,000		8,000
	Total Expenses		180,000		230,000
Operating Income			100,000		109,000
Interest Expense			14,000		21,000
Income Before Taxes			86,000		88,000
Income Tax Expense			17,200		17,600
Net Income			$ 68,800		$ 70,400
Average Shares Outstanding			20,000		20,000
Number of Stores			150		190	All new stores opened on 1/1/22
Stock Price			$ 70.00		Not Provided
1.	- Calculate the following ratios:
			2021		2022
	Gross profit %
	Operating profit %
	Net Profit %
	Earnings per share
	2021 PE Ratio				XXXXX	Do not calculate 2022 PE ratio
2.	- Prepare horizontal analysis of the change in key accounts; at least 3 ratios
	- Prepare vertical analysis of key expense accounts (amount as a percent of sales); at least 3 ratios for each year
	Hint: Per store analysis can be a helpful vertical analysis ratio for certain key financial statement accounts (i.e. Sales / store)
3.	What observations would you make regarding the income statement (at least 3)? Use at least 1
	ratio to support each observation.