Question

Income statements for Zachary Company for Year 3 and Year 4 follow:

ZACHARY COMPANY Income Statements
	Year 4				Year 3
Sales	$	201,600			$	181,600
Cost of goods sold		143,300				121,300
Selling expenses		20,200				18,200
Administrative expenses		12,100				14,100
Interest expense		3,500				5,500
Total expenses	$	179,100			$	159,100
Income before taxes		22,500				22,500
Income taxes expense		6,900				3,600
Net income	$	15,600			$	18,900

Required
a. Perform a horizontal analysis, showing the percentage change in each income statement component between Year 3 and Year 4.
b. Perform a vertical analysis, showing each income statement component as a percentage of sales for each year.

Perform a horizontal analysis, showing the percentage change in each income statement component between Year 3 and Year 4. (Negative answers should be indicated by a minus sign. Round your answers to 1 decimal place. (i.e., .234 should be entered as 23.4).)

ZACHARY COMPANY
Horizontal Analysis of Income Statements
	Percentage Change over Year 3
Sales		%
Cost of goods sold
Selling expenses
Administrative expenses
Interest expense
Total expenses
Income before taxes
Income taxes expense
Net income (loss)		%

Perform a vertical analysis, showing each income statement component as a percentage of sales for each year. (Percentages may not add exactly due to rounding. Round your answers to 1 decimal place. (i.e., .234 should be entered as 23.4).)

ZACHARY COMPANY
Vertical Analysis of Income Statements
	Percentage of Sales Year 4		Percentage of Sales Year 3
Sales		%		%
Cost of goods sold
Selling expenses
Administrative expenses
Interest expense
Total expenses
Income before taxes
Income taxes expense
Net income		%		%

Answer 1

If you have any doubts please comment on the answer.