The financial statements for Lynch Shoes Inc. follow:

LIABILITIES AND STOCKHOLDERS€™ EQUITY

Required:
1. Prepare common size income statements to be used for horizontal analysis for Lynch for 2009 to 2011 (in percentage terms, rounded to two decimal places). You do not need to include the actual dollar amounts shown above.
2. Indicate why Lynch€™s net income increased between 2009 and 2011.
3. Prepare common size balance sheets to be used for vertical analysis for 2011 and 2010 (in percentage terms, rounded to two decimal places). You do not need to include the actual dollar amounts shown above.
4. Indicate whether the proportion of dollars invested in the various categories of assets has changed significantly between 2010 and 2011.
5. Indicate whether the proportion of capital raised from the various liability categories and common stockholders€™ equity has changed significantly between 2010 and 2011.
6. Describe Lynch€™s performance and financial position.

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Lynch Shoes Inc. Consolidated Income Statements In thousands, except per share data) Year Ended December 31 2011 2010 $3,930,984 $3, $3,003,610 Revenues Costs and expenses 405,211 Cost of goods sold Selling and administrative $2,386,993 $2,089,089 $1,850,530 664,061 27,316 2 2 761,498 30,665 2,141 922,261 25,739 Other expenses li 43) $3,336,468 $2,883,393 $%2,541,864 461,746 174,700 串365,016 329,218 287,046 1,475 Total costs and expenses Income before income taxes Income taxes Net income 521,818 192,600 594,516 229,500 Lynch Shoes Inc. Consolidated Balance Sheets (In thousands) December 31 2011 2010 Current ossets: Cash and equivalents Accounts receivable, less allowance for doubtful 291,284 $260,050 596,018 471,202 27,511 32,977 1,387,758 497,795 (151,758) 346,037 110,363 28,703 $1,872,861 accounts of 19,447 and $20,046 661 ,541 592,986 26,378 42,452 $1,620,647 571,032 193,037) 377,995 157,894 30,927 $2,187 463 Inventories Deferred income taxes Total current assets Property, plant, and equipment Less accumulated depreciation Net property, plant, and equipment Goodwill Other assets Total assets Current portion of long-term debt Other noncurrent liabilities Commitments and contingencies Redeemable preferred stock 541,437 548,712 Class A convertible-26,691 and 26,919 shares 2 Class B-49,161 and 48,591 shares outstanding Capital in excess of stated value 2 108,451 Total stockholders' equity Total liabilities and stockholders' equity 1,542,486 $1,646,026 $2,187 463 1,234,333 $1,324,149 $1,872,861