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Common Size Analysis of Comparative Income Statements

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Required:
Prepare common size statements showing the percent of each item to net sales for both year 8 and year 9. Include a column reporting the percentage increase or decrease for year 9 relative to year 8 (round numbers to the tenth of 1%).

Interpret the trend shown in your percentage calculations. What areas identified from this analysis should be a matter of managerial concern.

Attached are the answers. Please check that this was done correctly. I am fairly certain that I did the vertical analysis correctly. However, I am concerned about the column for the increases or decreases. Please advise. My text does not provide an example. Thank you.

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Solution Summary

The solution explains how to carry out a common size analysis. The trends shown in percentage calculations are determined.

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