Vallejo

Brief Exercise 13-8 (Essay)
Vertical analysis (common-size) percentages for Vallejo Company’s sales, cost of goods sold, and expenses are listed here.

Vertical Analysis

2012

2011

2010
Sales
100
%
100
%
100
%
Cost of goods sold
62.7

63.6

66.7

Expenses
25.4

27.2

29.5
Did Vallejo’s net income as a percent of sales increase, decrease, or remain unchanged over the 3-year period? Provide numerical support for your answer.
Horizontal analysis (trend analysis) percentages for Spartan Company’s sales, cost of goods sold, and expenses are listed here.
Horizontal Analysis

2012

2011

2010
Sales 96.2 % 104.8 % 100.0 %
Cost of goods sold 101.0 98.0 100.0
Expenses 105.6 95.4 100.0

Explain whether Spartan’s net income increased, decreased, or remained unchanged over the 3-year period.