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Income statements for Stuart Company for Year 3 and Year 4 follow: STUART COMPANY Income Statements Year 4 Year 3 $201,700 142,700 21,800 12,500 3,800 $180,800 $181,700 120,700 19,800 14,500 5,800 $160,800 20,900 3,600 $ 17,300 Sales Cost of goods sold Selling expenses Administrative expenses Interest expense Total expenses Income before taxes 20,900 6,500 Income taxes expense $ 14,400 Net income Required a. Perform a horizontal analysis, showing the percentage change in each income statement component between Year 3 and Year b. Perform a vertical analysis, showing each income statement component as a percentage of sales for each year.

Income statements for Stuart Company for Year 3 and Year 4 follow: STUART COMPANY Income Statements Year 4 Year 3 $201,700 142,700 21,800 12,500 3,800 $180,800 $181,700 120,700 19,800 14,500 5,800 $160,800 20,900 3,600 $ 17,300 Sales Cost of goods sold Selling expenses Administrative expenses Interest expense Total expenses Income before taxes 20,900 6,500 Income taxes expense $ 14,400 Net income Required a. Perform a horizontal analysis, showing the percentage change in each income statement component between Year 3 and Year b. Perform a vertical analysis, showing each income statement component as a percentage of sales for each year.

Managerial Accounting
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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Income statements for Stuart Company for Year 3 and Year 4 follow: STUART COMPANY Income Statements Year 4 Year 3 $181,700 120,700 19,800 14,500 5,800 $160,800 20,900 3,600 Sales $201,700 142,700 Cost of goods sold Selling expenses Administrative expenses 21,800 12,500 3,800 $180,800 20,900 6,500 $ 14,400 Interest expense Total expenses Income before taxes Income taxes expense $ 17,300 Net income 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.
Transcribed Image Text:Income statements for Stuart Company for Year 3 and Year 4 follow: STUART COMPANY Income Statements Year 4 Year 3 $181,700 120,700 19,800 14,500 5,800 $160,800 20,900 3,600 Sales $201,700 142,700 Cost of goods sold Selling expenses Administrative expenses 21,800 12,500 3,800 $180,800 20,900 6,500 $ 14,400 Interest expense Total expenses Income before taxes Income taxes expense $ 17,300 Net income 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.
Required A Required B 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 percentage answers to 1 decimal place. (i.e., 0.234 should be entered as 23.4).) STUART COMPANY Vertical Analysis of Income Statements Percentage of Sales Year 4 Percentage of Sales Year 3 Sales 100.0 % 100.0 % Cost of goods sold 70.5 66.2 Selling expenses Administrative expenses Interest expense Total expenses Income before taxes Income taxes expense Net income %
Transcribed Image Text:Required A Required B 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 percentage answers to 1 decimal place. (i.e., 0.234 should be entered as 23.4).) STUART COMPANY Vertical Analysis of Income Statements Percentage of Sales Year 4 Percentage of Sales Year 3 Sales 100.0 % 100.0 % Cost of goods sold 70.5 66.2 Selling expenses Administrative expenses Interest expense Total expenses Income before taxes Income taxes expense Net income %
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