Required a. Perform a horizontal analysis, showing the percentage change in each income statement component between Year 3 and Year 4. b. Perform a vertical analysis, showing each income statement component as a percentage of sales for each year.
Income statements for Adams Company for Year 3 and Year 4 follow:
| ADAMS COMPANY Income Statements |
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| Year 4 | Year 3 | ||||||
| Sales | $ | 200,400 | $ | 180,400 | |||
| Cost of goods sold | 143,700 | 121,700 | |||||
| Selling expenses | 21,200 | 19,200 | |||||
| Administrative expenses | 12,600 | 14,600 | |||||
| Interest expense | 3,900 | 5,900 | |||||
| Total expenses | $ | 181,400 | $ | 161,400 | |||
| Income before taxes | 19,000 | 19,000 | |||||
| Income taxes expense | 6,900 | 3,400 | |||||
| Net income | $ | 12,100 | $ | 15,600 | |||
Required
a. Perform a horizontal analysis, showing the percentage change in each income statement component between Year 3 and Year 4.
b. Perform a vertical analysis, showing each income statement component as a percentage of sales for each year.
Perform a horizontal analysis, showing the percentage change in each income statement component between Year 3 and Year 4. (Negative answers should be indicated by a minus sign. Round your percentage answers to 1 decimal place. (i.e., 0.234 should be entered as 23.4).)
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B.
Perform a vertical analysis, showing each income statement component as a percentage of sales for each year. (Percentages may not add exactly due to rounding. Round your percentage answers to 1 decimal place. (i.e., 0.234 should be entered as 23.4).)
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A.
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