PE 3-10A Vertical analysis
Two income statements for Fortson Company are shown below.
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Fortson Company |
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Income Statements a |
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For Years Ended December 31 |
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2012 |
2011 |
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Fees earned |
$425,000 |
$375,000 |
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Operating expenses |
263,500 |
225,000 |
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Operating income |
$161,500 |
$150,000 |
a. Prepare a vertical analysis of Fortson Company’s income statements.
b. Does the vertical analysis indicate a favorable or unfavorable trend?