Vertical Analysis of Income Statement Revenue and expense data for Innovation Quarter Inc. for two recent...
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Vertical Analysis of Income Statement Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows: Sales Cost of goods sold Selling expenses Administrative expenses Income tax expense Current Year Previous Year $389,000 $331,000 241,180 188,670 58,350 56,270 52,960 13,240 66,130 7,780 a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers. Innovation Quarter Inc. Comparative Income Statement For the Years Ended December 31 Sales Current year Amount Current year Percent $389,000 Previous year Amount Previous year Percent % $331,000 % Cost of goods sold 241,180 % 188,670 % % % Selling expenses 58,350 % 56,270 % Administrative expenses 66,130 % 52,960 % $ % % % % Income tax expense 7,780 % 13,240 % % % b. The vertical analysis indicates that the cost of goods sold as a percent of sales administrative expenses by 1 percentage points. Thus, net income as a percent of sales by 5 percentage points, while selling expenses by 2 percentage points, and by 2 percentage points. Vertical Analysis of Income Statement Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows: Sales Cost of goods sold Selling expenses Administrative expenses Income tax expense Current Year Previous Year $389,000 $331,000 241,180 188,670 58,350 56,270 52,960 13,240 66,130 7,780 a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers. Innovation Quarter Inc. Comparative Income Statement For the Years Ended December 31 Sales Current year Amount Current year Percent $389,000 Previous year Amount Previous year Percent % $331,000 % Cost of goods sold 241,180 % 188,670 % % % Selling expenses 58,350 % 56,270 % Administrative expenses 66,130 % 52,960 % $ % % % % Income tax expense 7,780 % 13,240 % % % b. The vertical analysis indicates that the cost of goods sold as a percent of sales administrative expenses by 1 percentage points. Thus, net income as a percent of sales by 5 percentage points, while selling expenses by 2 percentage points, and by 2 percentage points.
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