Answered: quarter Inc comparative income tax for…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter16: Financial Statement Analysis

Section: Chapter Questions

Problem 1E

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Vertical analysis income statement Revenue expense data for Innovation quarter Inc for two recent years as follows. Sales Cost of goods. Selling expenses Administrative expenses Income tax expense Current year. 4,000,000 2,280,000 600,000 520,000 240,000 Previous year 3,600,000 1,872,000 648,000 360,000 216,000 A. Prepare an income statement in comparative form, stating to each item for both of years as a percent of sales. Round to the nearest whole percentage. Innovation quarter Inc comparative income tax for the years ended December 31st Sales Cost of goods Selling expenses Administrative expenses Income tax expense $ % $ % $ % $ % $ % $ % $ % $ % B. The vertical analysis indicates that the cost of the goods sold as a percent of sales by 5 percentage points, while selling expenses by 3% percentage and administrative expenses by 3% percentage points. Thus net income as a percent of sales by 5 percentage points.

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