Problem: Income statement for Shirley Company for 2005 and 2006 follow:
2006 2005
Sales 240,000 200,000
Cost of Goods Sold 147,900 108,000
Selling Expenses 40,100 22,000
Admin Expenses 24,000 28,000
Interest Expenses 6,000 12,000
Total Expenses 218,000 170,000
Income Before Taxes 22,000 30,000
Income Taxes Expense 6,000 8,000
Net Income 16,000 22,000
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.