Using the following income statements, perform the calculations needed for verti

Question

Using the following income statements, perform the calculations needed for vertical analyses. (Round your percentages to 1 decimal place.Omit the "%" sign in your response.)

LOCKEY FENCING CORPORATION
Vertical Analysis of Income Statements
For the Years Ended December 31
2010 2009
Net sales $ 100,000 % $ 75,000 %
Cost of goods sold 58,000 % 45,000 %

Gross profit 42,000 % 30,000 %
Selling, general, and administrative expenses 9,000 % 4,500 %

Income from operations 33,000 % 25,500 %
Interest expense 3,000 % 3,750 %

Income before income tax 30,000 % 21,750 %
Income tax expense 9,000 % 6,525 %

Net income $ 21,000 % $ 15,225 %

Explanation / Answer

                             2010                         2009
Net sales                   100%                     100%

Cost of goods sold      58000/100000 = 58.0%         45000/75000 = 60.0%

Gross Profit                42000/100000 = 42.0%         30000/75000 =40.0%

Selling, general...       9000/100000 = 9.0%             4500/75000 = 6.0%

Income from operation 33000/100000 = 33.0%        25500/75000 = 34.0%

Interest expense           3000/100000 = 3.0%           3750/75000 = 5.0%

Income before income tax 30000/100000 = 30.0%    21750/75000 = 29.0%

Income tax expenses      9000/100000 = 9.0%         6525/75000 = 8.7%           

Net income                    21000/100000 = 21.0%        15225/75000 20.3%

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