Analyzing Balance Sheet and Income Statement | Out of Alignment

School: University of Maryland - Course: ACCT 630 - Subject: Accounting

1. Prepare a horizontal and veritical analysis of the Balance Sheet and the Income Statement. Horizontal Analysis Income Statement 20X320X220X1 Sales$18,848 $12,445 $8,213 Cost of goods sold10,5986,8334,523 Gross profit8,2505,6123,690 General and administrative expenses9673,3661,889 Research and development costs1491,335895 Income from operations7,134911906 Net interest expense21764161 Loss on sale of receivables, factored--77 Income before income taxes6,917847668 Provision for income taxes2,268556284 Net income$4,649 $291 $384 Veritical Analysis of Income Statement 20X320X220X1 Sales100%100%100% Cost of goods sold56.20%54.94%55.07% Gross profit43.70%45.09%44.92% General and administrative expenses42.20%27.04%23.00% Research and development costs79.00%10.72%10.89% Income from operations37.85%7.32%11.03% Net interest expense1.15%1.29%1.96% Loss on sale of receivables, factored0.00%0.00%93.00% Income before income taxes36.69%6.80%8.13% Provision for income taxes12.30%4.40%3.45% Net income24.66%2.33%4.67%