A horizontal and vertical analysis of the income statement for a service company providing consulting services is shown below:
SERVICE CORPORATION
Horizontal Income Statement
Year Ended December 31

SERVICE CORPORATION
Vertical Income Statement
Year Ended December 31

Instructions
(a) How effectively has the company controlled its operating expenses over the four-year period?
(b) In a horizontal analysis, the company's income tax expense has changed exactly the same 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.
(c) Identify any other key financial statement components that have changed over the four-year period for the company.
(d) Identify any additional information that might be helpful to you in your analysis of this company over the four-year period?

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Revenue Operating expenses Profit from operations Other revenues and expenses 2015 120.0% 1 18.6% 123.3% 2014 1 10.0% 111.4% 106.7% 2013 14.0% 1 14.3% 1 13.3% 2012 100.0% 100.0% 100.0% Interest expense Other revenue Profit before income tax Income tax expense Profit 40.0% 240.0% 166.8% 166.8% 166.8% 60.0% 140.0% 130.2% 130.2% 130.2% 80.0% I 40.0% 131.7% 131.7% 131.7% 100.0% 100.0% 100.0% 100.0% 100.0% Revenue Operating expenses Profit from operations Other revenues and expenses 2015 100.0% 69.2% 30.8% 2014 100.0% 70.9% 291 % 2013 100.0% 70.2% 29.8% 2012 100.0% 70.0% 30.0% 7.09% (0.9% 23.7% 4.8% 18.9% Interest expense 3.3% 5.4% 10.0% Other revenue Profit before income tax Income tax expense Profit (1.0)% 28.5% 5.7% 22.8% (0.6)% 24.3% 4.9% 19.4% (0.5% 20.5% 41% 16.4%