Perform both a Vertical and Horizontal Trend analysis on the following Income Statement. 2021 2022 Sales $
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| 2021 | 2022 | |
| Sales | $ 1,500,000 | $ 1,325,000 |
| Cost of Goods Sold | $ 950,000 | $ 925,000 |
| Gross Profit | $ 550,000 | $ 400,000 |
| Marketing Expense | $ 17,000 | $ 23,000 |
| Insurance Expense | $ 25,000 | $ 33,000 |
| Depreciation expense | $ 75,000 | $ 75,000 |
| Total Operating Expenses | $ 117,000 | $ 131,000 |
| Income from operations (EBIT) | $ 433,000 | $ 269,000 |
| Interest expense | $ 175,000 | $ 125,000 |
| Income before taxes (EBT) | $ 258,000 | $ 144,000 |
| Income taxes | $ 103,200 | $ 57,600 |
| Net Income | $ 154,800 | $ 86,400 |
(ii) Calculate the following Ratios and comment on whether the ratio has gotten better or worse in 2022 vs 2021.
| Current Ratio |
| Quick Ratio |
| Debt to Assets |
| Times Int Earned |
| Avg Collection |
| Inventory Turn |
| Profit Margin |
| Return on Assets |
| Return on Equity |
| 2022 | 2021 | |
| Current Assets | 37,618 | 93,457 |
| Current Liabilities | 31,987 | 35,563 |
| Inventory | 4,673 | 17,899 |
| Total Debt | 44,274 | 42,979 |
| Total Assets | 285,198 | 41,988 |
| EBIT | 49,662 | 10,282 |
| Interest Expenses | 14,235 | 580 |
| Accounts Receivable | 14,214 | 15,533 |
| Sales | 288,137 | 280,515 |
| COGS | 11,925 | 11,676 |
| Profit | 40,620 | 45,335 |
| Total Equity | 57,098 | 90,010 |
Expert Answer:
Income Statement Analysis I Vertical Analysis This analysis expresses each line item as a percentage of total revenue 2021 2022 Sales 100 Cost of Good... View the full answer
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