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