Prepare vertical analysis.
Following is the income statement for Commerce Corporation for the year ended December 31, 20X7:
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Commerce Corporation
Income Statement
For the Year Ended December 31, 20X7
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Net sales
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$661,000
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Expenses:
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Cost of goods sold
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268,500
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Selling expenses
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45,000
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General expenses
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49,300
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Interest expense
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35,000
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Income tax expense
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30,000
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Total expenses
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427,800
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Net income
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$233,200
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a) Prepare a vertical analysis of the income statement showing appropriate percentages for each item listed above.
b) What additional information would you need to determine whether these percentages are good or bad?