The following income statement and vertical analysis data are available for Riley Manufacturing:
Riley Manufacturing
Consolidated Income Statements

Required:
1. Suggest why net income declined from $273,200 to $41,600 while the cost of goods sold percentage decreased each year and selling and administrative expenses remained nearly constant.
2. Determine what could cause sales to decline while the gross margin percentage increases?

Year ended June 30, 2018 2017 2019 (in thousands) Amount Amount Amount $2,970.0 $3,465.0 100.0 $3,960.0 100.0 Sales 100.0 Other income, net Total revenues 0.8 23.7 34.6 1.0 39.6 1.0 $2,993.7 $3,499.6 101.0 $3,999.6 100.8 101.0 Costs and expenses: Cost of goods sold Selling and administrative Interest $1,303.8 1,571.1 62.4 $1,566.2 1,593.9 45.2 $1,920.6 1,564.2 59.4 43.9 48.5 52.9 46.0 39.5 2.1 65.8 1.9 1.5 $3,225.9 $ 273.7 93.1 $3,544.2 $ 455.4 Total costs and expenses Income before income taxes $2,937.3 $ 56.4 98.9 89.5 1.9 7.9 11.5 Income taxes expense Net income 14.8 0.5 107.4 3.1 182.2 4.6 $ 273.2 $ 166.3 41.6 1.4 4.8 6.9