Chapter 11
Financial Statement Analysis
588
b) Perform a vertical analysis of income statement for 2016 and state all the income
statement items as a percentage of net sales.
Jade Inc.
Income Statement
For the Year Ended October 31
2016
2016
Sales
$700,800
Cost of Goods Sold
373,800
Gross Profit
327,000
Operating Expenses
Advertising
4,400
Utilities
8,200
Rent Expense
4,300
Salaries andWages
47,000
Depreciation
34,530
Interest
7,620
Total Operating Expenses
106,050
Operating Profit before Tax
220,950
Income Tax
55,100
Net Income
$165,850
Analysis
Analyze the strengths and weaknesses of Jade’s financial position based on the above
horizontal and vertical analyses.
