Following are the income statements for Alpha Company:

Requirements

1. For each of the years shown, prepare a vertical analysis, using sales as the base. Write a paragraph explaining what the analysis shows.

2. Using 2008 as the base year, prepare a horizontal analysis for sales and cost of goods sold. What information does this analysis give you?

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Alpha Company Income Statements (in thousands) For the Year Ended December 31, 2010 2009 2000 Net salcs..... Cost of goods sold Gross profit.. Selling, general, and administrative expenses.... Operating income Interest expense $5,003,837 $4,034,430 2,755,323 2,248,514 2,804,459 2,129,971 $4,881,103 2,784,392 2,006,711 1,673449 575,065 108 333 531,638 71,971 1573510 523,201 80,837 61,168 Interest and net investment expense (Income).. Other expense-net Income before income taxes Income taxes. Net income (5,761) 29,540 490,118 186 258 $ 303,860 (6,482) 26,046 440,103 167 239 $ 272,964 (8,278) 23,365 427,277 166,663 $ 260,614