Vertical Analysis You may use the attached video to help you complete this activ

ID: 2484610 • Letter: V

Question

Vertical Analysis

You may use the attached video to help you complete this activity. Following are the income statements for Rivera Company.

Express the partial comparative income statements for Rivera Company as common-size statements. Do not include the "%" sign when entering your answer. Enter amounts as positive numbers.

Rivera Company Partial Comparative Income Statements For the Years Ended December 31, 2014 and 2013 2014 2013 Net sales $424,000 $368,000 Cost of goods sold 254,400 239,200 Gross margin $169,600 $128,800 Selling expenses $106,000 $ 73,600 General expenses 50,880 36,800 Total operating expenses $156,880 $110,400 Operating income $ 12,720 $ 18,400

Explanation / Answer

Prepare the Rivera Company as common-size statements:

Rivera Company

Common-Size Income Statements

For the Years Ended December 31, 2014 and 2013

2014

2013

Net sales

100 %

Cost of goods sold

60 %

65 %

Gross margin

40 %

35 %

Selling expenses

25 %

20 %

General expenses

12 %

10 %

Total operating expenses

37 %

30 %

Operating income

3 %

5 %