Analyzing Financial Statements
Consider the following income statement (dollars in thousands):
|
2000 |
1999 |
|
|
Net revenues |
||
|
Software sales |
$ 77,350 |
$ 66,450 |
|
Customer support and service |
48,500 |
39,040 |
|
Total net revenues |
125,850 |
105,490 |
|
Operating expenses |
||
|
Cost of goods sold |
4,700 |
4,580 |
|
Sales and marketing |
60,650 |
40,235 |
|
Research, development, and support |
31,990 |
25,102 |
|
General and administrative |
19,036 |
19,438 |
|
Total operating expenses |
116,376 |
89,355 |
|
Income from operations |
$ 9,474 |
$ 16,135 |
Required
a. Conduct horizontal and vertical analyses of the firm’s income statement.
b. Describe several possible reasons for the firm’s decline in income from operations?
c. In what areas was the firm successful in 2000?
d. Based on the approximate trends shown here, is it likely that the firm’s income from operations will increase or decrease in 2001? Why?