A condensed income statement for Electronic Arts and a partially completed vertical analysis follow.

Required:

1. Complete the vertical analysis by computing each line item (a)–(d) as a percentage of net revenues. Round to the nearest whole percentage.

2. Does Electronic Arts’ 2016 Cost of Goods Sold, as a percentage of Net Revenues, represent better or worse performance as compared to 2015?

Transcribed Image Text:

ELECTRONIC ARTS, INC. Income Statement (summarized) For the Year Ended March 31 (in millions of U.S. dollars) 2016 2015 $4,396 100% $4,515 100% Net Revenues 1,354 Cost of Goods Sold 1,429 32 a Research and Development Expense 1,109 1,094 24 Sales and Marketing Expense 622 647 14 General and Administrative Expense 413 10 397 Income from Operations 898 20 948 21 Other Expenses 23 21 Income before Income Tax 877 20 925 20 Income Tax Recovery (Expense) (50) $ 875 279 6. |(1) $1,156 Net Income 19