Perform Horizontal And Vertical Analysis Practice Test

An issuer manufacturing company reports the following income statement amounts for the year ended December 31 (in $000). In 20X4: Revenue $120,000; Cost of sales $78,000; Research and development $6,000; Selling, general, and administrative expenses $18,000. In 20X5: Revenue $150,000; Cost of sales $105,000; Research and development $6,000; Selling, general, and administrative expenses $19,500. Based on vertical analysis of the income statement (each line item as a percentage of revenue), how does the cost structure change from 20X4 to 20X5?

A nonissuer manufacturing company reports the following balance sheet amounts (in $000) at December 31: Total debt (short-term plus long-term) 20X4 $25,000 and 20X5 $32,500; Total assets 20X4 $70,000 and 20X5 $75,000. Using horizontal analysis of total debt, what trend is indicated from 20X4 to 20X5?