Two income statements for Midnight Enterprises are shown below:
Midnight Enterprises Income Statement
For Year 1 and Year 2,Ended December 31
$\begin{array}{lcc}
&\underline { \text { Year 2 } } & \underline { \text { Year 1} } \
\text { Fees earned } & \$ {\$ 74,350} & \$ 520,600 \
\text { Operating expenses } & \underline{472,045} & \underline { \$ 33,390 }\
\text { Operating income } &\underline{\$ 202,305}& \underline { \$ 282,210}
\end{array}$

a- Prepare a vertical analysis of Midnight Enterprises' income statements.
b- Does the vertical analysis indicate a favorable or unfavorable trend?

Question

Two income statements for Midnight Enterprises are shown below:
Midnight Enterprises Income Statement
For Year 1 and Year 2,Ended December 31
 $\begin{array}{lcc}
&\underline { \text { Year 2 }  } & \underline { \text { Year 1}  } \
\text { Fees earned } & \$ {\$ 74,350} & \$ 520,600 \
\text { Operating expenses } & \underline{472,045} &  \underline {  \$ 33,390 }\
\text { Operating income } &\underline{\$ 202,305}&  \underline { \$ 282,210}
\end{array}$

a- Prepare a vertical analysis of Midnight Enterprises' income statements.
b- Does the vertical analysis indicate a favorable or unfavorable trend?

Quizplus · Accepted Answer

The Answer of Two income statements for Midnight Enterprises are shown below:
Midnight Enterprises Income Statement
For Year 1 and Year 2,Ended December 31
 $\begin{array}{lcc}
&\underline { \text { Year 2 }  } & \underline { \text { Year 1}  } \
\text { Fees earned } & \$ {\$ 74,350} & \$ 520,600 \
\text { Operating expenses } & \underline{472,045} &  \underline {  \$ 33,390 }\
\text { Operating income } &\underline{\$ 202,305}&  \underline { \$ 282,210}
\end{array}$

a- Prepare a vertical analysis of Midnight Enterprises' income statements.
b- Does the vertical analysis indicate a favorable or unfavorable trend?

Two Income Statements for Midnight Enterprises Are Shown Below: Midnight

Two Income Statements for Midnight Enterprises Are Shown Below:
Midnight