Chapter 14, Problem 14.1EX

Vertical analysis of income statement

Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows:

	Current Year	Previous Year
Sales	$4,000,000	$3,600,000
Cost of goods sold	2,280,000	1,872,000
Selling expenses	600,000	648,000
Administrative expenses	520,000	360,000
Income tax expense	240,000	216,000

1. A. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. (Round to the nearest whole percentage.)
2. B. Comment on the significant changes disclosed by the comparative income statement.