In conducting the income statement vertical analysis for Allergan, a few observations can be made. The company has been able to reduce its operating costs as a percent of sales on many fronts. The cost of sales as a percent of sales declined from 14.68% in 2010 to 11.6% in 2014. Moreover, SG&A expenses, the largest operating expense category for Allergan, also increased from 41.46% in 2011 to 42.7% in 2014. On the other hand, research and development expenses increased from 16.36% in 2010 to 16.43% in 2013. This is understandable because pharmaceutical companies, such as Allergan, thrive on having robust R&D activities for new inventions. Allergan has been able to control most of its operating costs resulting in higher profit margins,
