Comparative income statements of Spyres Manufacturing Company for Years 9 and 8 are reproduced below:

Required:
a. Prepare common-size statements showing the percent of each item to net sales for both Year 8 and Year 9. Include a column reporting the percentage increase or decrease for Year 9 relative to Year 8 (round numbers to the tenth of 1%).
b. Interpret the trend shown in your percentage calculations of a. What areas identified from this analysis should be a matter of managerialconcern?

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Net sales. Cost of goods sold. Gross margin Operating expenses Income before taxes Income taxes. Net income Year 9 Year 8 $600,000 $500,000 490,000 430,000 110,000 70,000 101,000 51,000 9,000 19,000 2,400 5,000 $6,600 14,000