Question

Vertical Analysis Two income statements for Cornea Company follow: Cornea Company Income Statements For Years Ended December 31 2019 2018 Fees earned $680,000 $576,000 Operating expenses 482,800 420,480 Operating income $197,200 $155,520 Prepare a vertical analysis of Cornea Company's income statements. Enter percents as whole numbers.

Answer 1

Answer:

                                        Cornea Company

               Income Statements For Years Ended December 31

                                             2019                         2018

                                     Amount     Percent    Amount      Percent

Fees earned               $680,000    100%     $576,000    100%

Operating expenses   $482,800     71%        $420,480     73%

Operating income      $197,200       29%      $155,520     27%

Operating expense working

2019= 482,800/680,000 * 100/1= 71% = 0.71

2018= 420,480/576,000 * 100/1= 73% = 0.73

Operating Income working

2019= 1 - 0.71 = 0.29 = 29%

2018= 1 - 0.73 = 0.27= 27%