Horizontal and vertical analysisIncome statements for Marstrander Company for 2005 and 200

Horizontal and vertical analysis

Income statements for Marstrander Company for 2005 and 2006 follow.

 

 

2006

2005

Sales

$242,000

$184,000

Cost of Goods Sold

150,000

102,000

Selling Expenses

40,000

22,000

Administrative Expenses

24,000

28,000

Interest Expense

6,000

10,000

Total Expenses

$220,000

162,000

Income before Taxes

22,000

22,000

Income Taxes Expense

6,000

 4,000

Net Income

$ 16,000

$ 18,000

Required

a. Perform a horizontal analysis, showing the percentage change in each income statement component between 2005 and 2006.

b. Perform a vertical analysis, showing each income statement component as a percent of sales for each year.

 

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