Respuesta :
Answer:
Innovation Quarter Inc. - Common Size Income Statement
Previous Year Current Year
Sales 100% 100%
Cost of Goods sold 52% 57%
Gross Profit 48% 43%
Operating Expenses
Selling Expense 18% 15%
Administrative Expense 10% 13%
Total Operating Expense 28% 28%
Profit Before Tax 20% 15%
Income Tax 6% 6%
Profit After Tax 14% 9%
Explanation:
This is basically known as common sizing where each item in the financial statement is represented as a percentage of a base item. For income statement it is usually revenue and for statement of financial position (balance sheet) it is total asset and total liabilities.
Answer:
The Comparative Vertical Analysis of Income Statement is
Current Year % Previous Year %
Sales $4,000,000 100% $3,600,000 100%
Cost of goods sold 2,280,000 57% 1,872,000 52%
Gross profit $1,720,000 43% $1,728,000 48%
Selling expense 600,000 15% 648,000 18%
Administrative expenses 520,000 13% 360,000 10%
Income tax expense 240,000 6% 216,000 6%
After Tax Income $360,000 9% $504,000 14%
Explanation:
Calculations are given below
The Vertical Analysis of the Income Statement Revenue and expense data for Innovation Quarter Inc. for two recent years are ,
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
Innovation Quarter Inc. can utilize this upward examination to communicate the connection between each detail and the business income.
The upward investigation helps in learning the rate expansions in every factor. With the investigation, the administration of Innovation Quarter Inc. can embrace further examinations to get familiar with the reasons for the various exhibitions and learn approaches to control them.
