Prepare common size income statement for horizontal analysis

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Reference no: EM13938869

HORIZONTAL ANALYSIS OF INCOME STATEMENTS

Consolidated income statements for Peach Computer appear below:

PEACH COMPUTER, INC. Consolidated Statements of Income (In thousands except per share amounts)
Three fiscal years ended December 31	2009	2008	2007
Sales	$9,188,748	$7,976,954	$7,086,542
Costs and expenses:
Cost of goods sold	$6,844,915	$5,248,834	$3,991,337
Research and development	564,303	664,564	602,135
Selling, general, and administrative	1,384,111	1,632,362	1,687,262
Restructuring costs and other	(126,855)	320,856	-
	$8,666,474	$7,866,616	$6,280,734
Operating income	$ 522,274	$ 110,338	$ 805,808
Interest and other income, net	(21,988)	29,321	49,634
Income before income taxes	$ 500,286	$ 139,659	$ 855,442
Provision for income taxes	190,108	53,070	325,069
Net income	$ 310,178	$ 86,589	$ 530,373
Earnings per common and common
equivalent share	$2.61	$0.73	$4.33
Common and common equivalent
shares used in the calculations of
earnings per share	118,735	119,125	122,490

Required:

1. Prepare common size income statements for horizontal analysis.

2. Explain why net income decreased in 2008 and increased in 2009.

Reference no: EM13938869

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