Question

thank you!!

Operating data for Martinez Corp are presanted balow ort 2022 2021 Sales revenue $842,600 $639,100 Cost of goods sold 529,000 410,400 Selling expanses 123,900 76,300 Administrative expenses 73,000 52,400 Income tax exopanse 37,700 23,100 Net income 79,000 76,900 Prapare a schadule showing a vertical analysis for 2022 and 2021 (Round parentages to 1 decimal placa, ag 121K) MARTINEZ CORP Condensed Income Statement 2022 2021 Amount Percent Amount Percent Sales $842 600 $639 100 Cost of goods sold 529,000 410 400 Gross profit 313.400 228.700 Selling expenses 123.900 76,300 Aumnistrative expenses 73 000 $2400 Tol peing xperises 196PO0 128.700 116,700 100.000 1700 2 100 NN $75.900 Tex:book and Medla

Answer 1

Solution: Schedule of Vertical Analysis for 2022 and 2021

MARTINEZ CORP.
Condensed Income Statement
for year 2021 and 2022
	2022		2021
	Amount	Percent	Amount	Percent
Sales	$        842,600	100.0%	$        639,100	100.0%
Cost of goods sold	$        529,000	62.8%	$        410,400	64.2%
Gross Profit	$        313,600	37.2%	$        228,700	35.8%
Selling Expenses	$        123,900	14.7%	$          76,300	11.9%
Administrative expenses	$          73,000	8.7%	$          52,400	8.2%
Total operating expenses	$        196,900	23.4%	$        128,700	20.1%
Income before income taxes	$        116,700	13.8%	$        100,000	15.6%
Income tax expense	$          37,700	4.5%	$          23,100	3.6%
Net Income	$          79,000	9.4%	$          76,900	12.0%

Notes:

Total Sales increased in 2022 when compared with 2021 but Net Income decreased because of following reasons:

1) Gross Profit has increased with the decrease in cost of goods sold but because of increase in operating expenses(selling and administrative) and income tax expenses, the net income came to 9.4% from 12%.