Here are comparative statement data for Ivanhoe Company and Pharoah Company, two competitors. All balance sheet data are as of December 31, 2017, and December 31, 2016. 2017 2016 2017 2016
(Ivanhoe (Ivanhoe (Pharoah (Pharoah
Company) Company) Company) Company)
Net sales $1,865,000 $595,000
Cost of goods sold 1,064,000 279,000
Operating expenses 252,000 84,000
Interest expense 8,000 1,800
Income tax expense 70,900 35,000
Current assets 583,495 $559,214 149,171 $142,246
Plant assets (net) 942,972 895,000 250,113 225,203
Current liabilities 118,722 135,709 63,273 54,203
Long-term liabilities 204,042 161,100 53,020 44,750
Common stock, $10 par 895,000 895,000 214,800 214,800
Retained earnings 308,703 262,405 68,192 53,696
Required:
Prepare a vertical analysis of the 2017 income statement data for Ivanhoe Company and Pharoah Company.

                            Condensed Income Statement

                       For the Year Ended December 31, 2017

                                               Ivanhoe Company     Pharaoh Company

Net sales                                 $1,865,000  100%      $595,000   100%

Cost of goods sold                ($1,064,000)  57%       ($279,000)   47%

Gross profit                                $801,000   43%         $316,000   53%

Operating expenses               ($252,000)   14%         ($84,000 )   14%

EBIT                                           $549,000   29%        $232,000   39%

Interest expense                         ($8,000)  0.4%            ($1,800 )  0.3%

Income tax expense                 ($70,900)  3.8%         ($35,000)  5.9%

Net income after taxes             $470,100  25.2%        $195,200  32.8%

A vertical analysis of an income statement uses net sales as the reference for all the other accounts. The other accounts are shown as a % of total net  sales.  

answer///supply is elastic, and demand is inelastic;