Exercise 9-3 Horizontal and vertical analysis LO 9-1 Income statements for Munoz

Question

Exercise 9-3 Horizontal and vertical analysis LO 9-1

Income statements for Munoz Company for 2018 and 2019 follow:

Required

Perform a horizontal analysis, showing the percentage change in each income statement component between 2018 and 2019.

Perform a vertical analysis, showing each income statement component as a percentage of sales for each year.

erform a horizontal analysis, showing the percentage change in each income statement component between 2018 and 2019. (Negative answers should be indicated by a minus sign. Round your answers to 1 decimal place. (i.e., .234 should be entered as 23.4).)

Exercise 9-3 Horizontal and vertical analysis LO 9-1

Income statements for Munoz Company for 2018 and 2019 follow:

Required

Perform a horizontal analysis, showing the percentage change in each income statement component between 2018 and 2019.

Perform a vertical analysis, showing each income statement component as a percentage of sales for each year.

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 answers to 1 decimal place. (i.e., .234 should be entered as 23.4).)

MUNOZ COMPANY
Income Statements 2019 2018 Sales $ 201,200 $ 181,200 Cost of goods sold 143,100 121,100 Selling expenses 21,800 19,800 Administrative expenses 12,700 14,700 Interest expense 3,300 5,300 Total expenses $ 180,900 $ 160,900 Income before taxes 20,300 20,300 Income taxes expense 6,800 3,300 Net income $ 13,500 $ 17,000

Explanation / Answer

MUNOZ COMPANY Horizontal Analysis of Income Statements Percentage Change over 2018 Sales 11.0% Cost of goods sold 18.2% Selling expenses 10.1% Administrative expenses -13.6% Interest expense -37.7% Total expenses 12.4% Income before taxes 0.0% Income taxes expense 106.1% Net income (loss) -20.6% MUNOZ COMPANY Vertical Analysis of Income Statements Percentage of Sales 2019 Percentage of Sales 2018 Sales 100.0% 100.0% Cost of goods sold 71.1% 66.8% Selling expenses 10.8% 10.9% Administrative expenses 6.3% 8.1% Interest expense 1.6% 2.9% Total expenses 89.9% 88.8% Income before taxes 10.1% 11.2% Income taxes expense 3.4% 1.8% Net income 6.7% 9.4%

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