In: Accounting
Comparative Income Statement | ||||
For the Years Ended December 31, 20Y2 and 20Y1 | ||||
20Y2 Amount | 20Y2 Percent | 20Y1 Amount | 20Y1 Percent | |
Sales | $750,000 | % | $645,000 | % |
Cost of goods sold | 397,500 | % | 380,550 | % |
Gross profit | $352,500 | % | $264,450 | % |
Selling expenses | 142,500 | % | 116,100 | % |
Administrative expenses | 75,000 | % | 77,400 | % |
Total operating expenses | $217,500 | % | $193,500 | % |
Income from operations | $135,000 | % | $70,950 | % |
Other income | 22,500 | % | 19,350 | % |
Income before income tax | $157,500 | % | $90,300 | % |
Income tax expense | 60,000 | % | 38,700 | % |
Net income | $97,500 | % | $51,600 | % |
2. The vertical analysis indicates that the costs other than selling expenses (cost of goods sold and administrative expenses) as a percentage of sales. As a result, net income as a percentage of sales . The sales promotion campaign appears to have been . While selling expenses as a percent of sales slightly, the cost was more than made up for by sales.
1 | ||||
Comparative Income Statement | ||||
For the Years Ended December 31, 20Y2 and 20Y1 | ||||
20Y2 Amount | 20Y2 Percent | 20Y1 Amount | 20Y1 Percent | |
Sales | 750000 | 100.0% | 645000 | 100.0% |
Cost of goods sold | 397500 | 53.0% | 380550 | 59.0% |
Gross profit | 352500 | 47.0% | 264450 | 41.0% |
Selling expenses | 142500 | 19.0% | 116100 | 18.0% |
Administrative expenses | 75000 | 10.0% | 77400 | 12.0% |
Total operating expenses | 217500 | 29.0% | 193500 | 30.0% |
Income from operations | 135000 | 18.0% | 70950 | 11.0% |
Other income | 22500 | 3.0% | 19350 | 3.0% |
Income before income tax | 157500 | 21.0% | 90300 | 14.0% |
Income tax expense | 60000 | 8.0% | 38700 | 6.0% |
Net income | 97500 | 13.0% | 51600 | 8.0% |
2 | ||||
The vertical analysis indicates that the costs other than selling expenses (cost of goods sold and administrative expenses) improved as a percentage of sales. As a result, net income as a percentage of sales increased from 8% to 13% .The sales promotion campaign appears to have been successful.. While selling expenses as a percent of sales increased slightly (1%), the increased cost was more than made up for by increased sales. |