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Presented below is an income statement, with the past two years' results presented: 2016 2015 Revenue $4,200,000 $4,000,000 Cost of goods sold $2,910,000 $2,800,000 Gross
Presented below is an income statement, with the past two years' results presented:
2016 | 2015 | |
Revenue | $4,200,000 | $4,000,000 |
Cost of goods sold | $2,910,000 | $2,800,000 |
Gross profit | $1,290,000 | $1,200,000 |
Selling cost | $280,000 | $250,000 |
Administrative cost | $140,000 | $120,000 |
Operating profit | $870,000 | $830,000 |
Interest expense | $78,000 | $80,000 |
Income before taxes | $792,000 | $750,000 |
Income taxes | $277,200 | $262,500 |
Net income | $514,800 | $487,500 |
Prepare a vertical analysis of both 2016 and 2015. Display percentages to 3 decimal places (.654 = 65.4%). Discuss any line items from the income statement that may warrant further investigation from management.
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