Here are the two most recent income statements for Gellatly Inc.:

2019 2018

Sales $ 800,000 $600,000

Cost of Goods Sold 500,000 390,000

Gross Profit 300,000 210,000

Selling Expenses 120,000 72,000

Administrative Expenses 80,000 54,000

Income Tax Expense 38,400 25,200

Net Income $ 61,600 $ 58,800

Required:

1. Prepare a vertical analysis for each year, in the space below. Round all figures to one digit after the decimal place (i.e., xx.x%). I have started these off for you.......

2019 2018

Sales 100.0% 100.0%

Cost of Goods Sold

Gross Profit

Selling Expenses

Administrative Expenses

Income Tax Expense

Net Income

1. In which year did Gellatly experience a higher gross profit %? Prove your answer with the figures.

1. In which year did Gellatly experience a higher Net Income %? Show the figures in your answer.

1. Obviously, Gellatly had a higher Net Income in 2019 than in 2018. But what does the Vertical Analysis tell you about Gellatly's performance in 2019?