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. (Rounı your answers to the nearest whole percent.)

Answer 1

                                                               VERTICAL ANALYSIS 

                                                            SIMULTECH CORPORATON

                                                  INCOME STATEMENT ( In Millions of US Dollars )

                                                                               Current year     Previous Year

Sales revenues   (1)	2085	100%	2150	100%
cost of goods sold    (2)	1737	83%	1621	75.40%
Gross profit   (1-2) = (3)	348	17%	529	24.60%
selling, General and Administrative Expenses  (4)	245	11.75%	246	11.44%
other operating expenses    (5)	43	2.06%	11	0.51%
Income Before Interest and Tax (3-4-5)=(6)	60	2.88%	272	12.65%
Interest expense   (7)	12	0.58%	36	1.67%
Income before Income Tax Expense  (6-7) = (8)	48	2.30%	236	10.98%
Income Tax Expense (9)	8	0.38%	50	2.33%
Net Income  ( 8 - 9)=10	40	1.92%	186	8.65%

GIVE A THUMBS UP IF YOU LIKE THE SOLUTION