Horizontal and vertical analysis
Income statements for Sennett Company for 2008 and 2009 follow.
| 2009 | 2008 | |
| Sales | $121,000 | $92,000 |
| Cost of goods sold | 75,000 | 51,000 |
| Selling expenses | 20,000 | 11,000 |
| Administrative expenses | 12,000 | 14,000 |
| Interest expense | 3,000 | 5,000 |
| Total expenses | 110,000 | 81,000 |
| Income before taxes | 11,000 | 11,000 |
| Income taxes expense | 3,000 | 2,000 |
| Net income | $ 8,000 | $ 9,000 |
Required
a. Perform a horizontal analysis, showing the percentage change in each income statement component between 2008 and 2009.
b. Perform a vertical analysis, showing each income statement component as a percent of sales for each year.
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