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Two income statements for Midnight Enterprises are shown below: Midnight Enterprises Income Statement For Year 1 and Year 2, Ended December 31 Year 2 Year
Two income statements for Midnight Enterprises are shown below:
| Midnight Enterprises Income Statement For Year 1 and Year 2, Ended December 31 | ||
| Year 2 | Year 1 | |
| Fees earned | $674,350 | $520,600 |
| Operating expenses | 472,045 | 338,390 |
| Operating income | $202,305 | $182,210 |
(a) Prepare a vertical analysis of Midnight Enterprises income statements. (b) Does the vertical analysis indicate a favorable or unfavorable trend?
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