Answer question 2 and 3 ty 2. vertical analysis 3. simple explaination

Chapter 16 Homework Problem erkitch Company's condensed comparative income statements and comparative balance sheets for 2016 and 2015 follow Merkitch Company Comparative Income Statements For the Years Ended December 31, 2016 and 2015 2016 2015 Net sales Cost of goods sold Gross profit Operating expenses $3,276,800 2,088,800 $1,188,000 $3,146,400 2,008,400 $1,138,000 $518,000 423,200 $924,000$941,200 $196,800 39,200 $157,600 56,800 100,800 $2.52 $476,800 447,200 Selling expenses Administrative expenses Total operating expenses Net operating income Interest expense Income before income taxes Income taxes expense Net income $264,000 $198,400 62,400 $136,000 $ 3.40 Earnings per share Merkitch Company Comparative Balance Sheets As of December 31, 2016 and 2015 2016 2015 Assets $40,800 229,200 594,800 720,000 $1,641,600 $1,584,800 $81,200 235,600 574,800 750,000 Accounts receivable (net Invento Property, plant & equipment (net) Total assets Liabilities & Stockholders' Equit Accounts payable Notes payable (short-term) Bonds payable Common stock, $10 par value Retained earnings Total liabilities & stockholders' equity $267,600 200,000 400,000 400,000 374,000 477.200 400,000 400,000 307,600 $1,641,600 $1,584,800 Prepare schedules showing the amount and percentage changes from 2015 to 2016 for the comparative income statements and the balance sheets (horizontal analysis). (Round to one decimal place.) Prepare common-size income statements and balance sheets for 2015 and 2016 (vertical analysis). (Round to one decimal place.) Comment on the results in #1 and #2 by identifying favorable and unfavorable changes in the components and composition of the statements. 1. 2. 3