Horizontal and vertical analysis

Horizontal and vertical analysis

Income statements for Sennett Company for 2008 and 2009 follow.

2009 2008
Sales $121,000 $92,000
Cost of goods sold 75,000 51,000
Selling expenses 20,000 11,000
Administrative expenses 12,000 14,000
Interest expense 3,000 5,000
Total expenses 110,000 81,000
Income before taxes 11,000 11,000
Income taxes expense 3,000 2,000
Net income $ 8,000 $ 9,000

Required

a. Perform a horizontal analysis, showing the percentage change in each income statement component between 2008 and 2009.

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

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