Vertical Analysis of Income Statement

							Vertical Analysis of Income Statement

The cost of goods sold in 2004 has decreased as a percentage of sales to 49.21%, from
53.43% in 2003. From this stat you can derive that every dollar of revenue costs $0.49 to
generate. Has a result, the Gross Margin in 2004 is 50.8%, up from the 46.57% in 2003.
The gross margin and sales revenues for Serious Spokes is second in the industry to
BMG Pro. Nevertheless, Serious Spokes is the industries front runner in earnings per
share and profit after tax.

Selling and distribution expenses represent 21% of total sales, down from 25% in
2003.Administration and financial expenses represent 2.36% of total sales, once again
down from 2.86% in 2003. Product advertising increased by 21.33%. Another significant
change was in Product PR which decreased 87.80% from 2003. While Finished goods
warehousing increased 217.43%. The changes in expenses have proven successful as the
companies total sales have increased.

Total Net Income has increased 52.35% from 2003. The decrease in both total expenses
and cost of goods sold, along with the increase in sales explains the dramatic increase in
profitability.