A horizontal and vertical analysis of the income statement for a service company providing consulting services is shown below.

Instructions
(a) How effectively has the company controlled its operating expenses over the four-year period?
(b) Identify any other income statement components that have significantly changed over the four-year period for the company.
(c) Identify any additional information that might be helpful to you in your analysis of this company over the four-year period.
Taking It Further
In a horizontal analysis, the company's income tax expense has changed exactly as much as profit (66.8%) over the four-year period. Yet, in a vertical analysis, the income tax percentage is different than the profit percentage in each period. Explain how this is possible?

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SERVICE CORPORATION Horizontal Income Statement Year Ended January 31 Revenue Operating expenses Profit from operations Other revenues ande 2014 120.0% 118.6% 123.3% 2013 110.0% 111.4% 106.7% 2012 114.0% 114.3% 113.3% 2011 100.0% 100.0% 100.0% xpenseS Interest expense Other revenue Profit before income tax Income tax expense Profit 40.0% 240.0% 166.8% 166.8% 166.8% 60.0% I 40.0% 130.2% 130.2% 130.2% 80.0% 200.0% 131.7% 131.7% 131.7% 100.0% 100.0% 100.0% 100.0% 100.0% SERVICE CORPORATION Vertical Income Statement Year Ended January 31 Revenue Operating expenses Profit from operations Other revenues and expenses 2014 100.0% 69.2% 30.8% 2013 100.0% 70.9% 29-196 2012 100.0% 70.2% 29.8% 2011 100.0% 70.0% 30.0% (3.3)% 1.0% 28.5% 5.7% 22.8% (5.4)% 0.6% 24.3% 4.9% 19.4% (7.0)% 0.9% 23.7% 4.8% 18.9% (10.0)% 0.5% 20.5% 41% 16.4% Interest expense Other revenue Profit before income tax Income tax expense Profit