Alpha Company Income Statements (in thousands)
| Year ending December 31, |
|
2010 |
2009 |
2008 |
| Net Sales |
|
$5,003,837 |
$4,934,430 |
$4,881,103 |
| Cost of Goods Sold |
|
2,755,323 |
2,804,459 |
2,784,392 |
| Gross Profit |
|
2,248,514 |
2,129,971 |
2,096,711 |
| Selling, general, and |
|
|
|
|
| administrative exp |
|
1,673,449 |
1,598,333 |
1,573,510 |
| Operating Income |
|
575,065 |
531,638 |
523,201 |
| Interest Expense |
|
61,168 |
71,971 |
80,837 |
| Interest and net investment |
|
|
|
|
| expense (income) |
|
(5,761) |
(6,482) |
(8,278) |
| Other expense-net |
|
29,540 |
26,046 |
23,365 |
| Income before income taxes |
490,118 |
440,103 |
427,277 |
| Income taxes |
|
186,258 |
167,239 |
166,663 |
| Net Income |
|
$303,860 |
$272,864 |
$260,614 |
Requirements:
1. For each of the years shown, prepare a vertical analysis, using sales as the base. Write a paragraph explaining what the analysis shows.
2. Using 2008 as the base year, prepare a horizontal analysis for sales and cost of goods sold. What information does this analysis give you?