Problem 1: Comparative income statements for 2020 and 2019 follow. Sales Cost of Sales Gross Profit Operating Expenses Operating Income Interest Expense Earnings Before Tax Income Taxes Net Income 2020 $9,434,000 7,075,400 $2,358,600 $2,201,360 1,367,690 1,365,060 $ 990,910 $836,300 157,500 126,000 $ 833,410 $ 710,300 400,000 317,200 $ 433,410 $ 393,100 2019 $7,862,000 5,660,640 Required: 4 a. Prepare a vertical common-size analysis of this statement for each year, using sales as the base. b. Comment briefly on the changes between the two years, based on the vertical common-size statement.

Problem 1: Comparative income statements for 2020 and 2019 follow. Sales Cost of Sales Gross Profit Operating Expenses Operating Income Interest Expense Earnings Before Tax Income Taxes Net Income 2020 $9,434,000 7,075,400 $2,358,600 $2,201,360 1,367,690 1,365,060 $ 990,910 $836,300 157,500 126,000 $ 833,410 $ 710,300 400,000 317,200 $ 433,410 $ 393,100 2019 $7,862,000 5,660,640 Required: 4 a. Prepare a vertical common-size analysis of this statement for each year, using sales as the base. b. Comment briefly on the changes between the two years, based on the vertical common-size statement.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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