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Using Table 4-9, perform a vertical analysis of the Mosbacher Insurance Agency.

Using Table 4-9, perform a vertical analysis of the Mosbacher Insurance Agency.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Using Table 4-9, perform a vertical analysis of the Mosbacher Insurance Agency. 



TABLE 4–9 Income Statement for Mosbacher Insurance Agency Mosbacher Insurance Agency Abbreviated Average Income Statement January 1 to December 31 Category Revenue Amount $650,000 Operating Expenses Salary/Commission Phone, Computer, Utilities Postage Marketing, printing & Advertising Insurance Rent Misc 150,000 10,000 10,000 25,000 20,000 15,000 20,000 $250,000 Total Operating Expenses Operating Income Taxes Net Income After Taxes $400,000 $ 75,000 $325,000 Note: Expenses obtained via memo from Gerson Mosbacher, December 20, 2007.
Transcribed Image Text:TABLE 4–9 Income Statement for Mosbacher Insurance Agency Mosbacher Insurance Agency Abbreviated Average Income Statement January 1 to December 31 Category Revenue Amount $650,000 Operating Expenses Salary/Commission Phone, Computer, Utilities Postage Marketing, printing & Advertising Insurance Rent Misc 150,000 10,000 10,000 25,000 20,000 15,000 20,000 $250,000 Total Operating Expenses Operating Income Taxes Net Income After Taxes $400,000 $ 75,000 $325,000 Note: Expenses obtained via memo from Gerson Mosbacher, December 20, 2007.
Expert Solution
Step 1: Introduction

Vertical analysis is a method of analyzing financial statements that list each line item as a percentage of a base figure within the statement. The first line of the statement always shows the base figure at 100%, with each following line item representing a percentage of the whole.

Each components of the income statement is compared to sales. The formula to compare:

% of component to sales=Amount of component of the incomeSales×100

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