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

MUNOZ COMPANY Income Statements
	Year 4				Year 3
Sales	$	201,500			$	181,500
Cost of goods sold		142,600				120,600
Selling expenses		21,500				19,500
Administrative expenses		12,700				14,700
Interest expense		3,900				5,900
Total expenses	$	180,700			$	160,700
Income before taxes		20,800				20,800
Income taxes expense		6,900				3,200
Net income	$	13,900			$	17,600

Required a. Perform a horizontal analysis, showing the percentage change in each income statement component between Year 3 and Year 4.

MUNOZ 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)		%

b. Perform a vertical analysis, showing each income statement component as a percentage of sales for each year.

MUNOZ COMPANY
Vertical Analysis of Income Statements
	Percentage of Sales Year 4		Percentage of Sales Year 3
Sales		%		%
Cost of goods sold
Selling expenses
Administrative expenses
Interest expense
Total expenses
Income before taxes
Income taxes expense
Net income		%		%