Question

A condensed income statement for Simultech Corporation and a partially completed vertical analysis are presented below. Required: 1. Complete the vertical analysis by computing each missing line item as a percentage of sales revenues. (Round your answers the nearest whole percent.) Previous Year SIMULTECH CORPORATION Income Statement (summarized) (in millions of U.S. dollars) Current Year Sales Revenues $ 2.067 1001S Cost of Goods Sold 1.557 Selling. General and Administrative Expenses Other Operating Expenses Interest Expense Income before income taxes Income Tax Expense 4101

Answer 1

1.

SIMULTECH CORPORATION
Income Statement (summarized)
(in millions of U.S. dollars)
	Current Year			Previous Year
Sales revenues	2,067	100	%	2,500	100	%
Cost of goods sold	1,557	75	%	1,801	72	%
Selling, general and administrative expenses	410	20	%	426	17	%
Other operating expenses	42	2	%	13	1	%
Interest expense	16	1	%	18	1	%
Income before income taxes	42	2	%	242	10	%
Income tax expense	8	0	%	30	1	%
Net Income	34	2	%	212	8	%

2. Cost of goods sold represents worse situation since in the current year cost of goods sold percentage has increased as compared to the previous year.

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