Here are the comparative income statements of Erik Corporation.
Comparative Income Statements
For the years ended December 31
Net Sales $572,000 $520,000
Cost of goods sold 477,000 450,000
Gross Profit 95,000 70,000
Operating Expenses 60,000 45,000
Net Income 35,000 25,000
(see attachment for better formatting of the tables)
A) Prepare a horizontal analysis of the income statement data for Erik Corporation using 2006 as a base (show the amounts of increase or decrease).
B) Prepare a vertical analysis of the income statement data for Erik Corporation for both years.
Excel spreadsheet shows how to carry out a horizontal and vertical analysis of an income statement.