Vertical analysis
Two income statements for Cornea Company are shown below.
|
Cornea Company Income Statements For Years Ended December 31 |
||
|
2014 |
2013 |
|
|
Fees earned |
$1,640,000 |
$1,300,000 |
|
Operating expenses |
869,200 |
715,000 |
|
Operating income |
$ 770,800 |
$ 585,000 |
a. Prepare a vertical analysis of Cornea Company’s income statements.
b. Does the vertical analysis indicate a favorable or an unfavorable trend?