The Following Items Were Taken from the Financial Statements of Gannon

question 43

Essay

The following items were taken from the financial statements of Gannon Inc, over a three-year period: $$\begin{array} { l r r r } & \underline { 2016 } & \underline { 2015 } & \underline { 2014 } \\\text { Net sales } & \$ 340,000 & \$ 330,000 & \$ 300,000 \\\text { Cost of goods sold } & 209,000 & 201,000 & 186,000 \\\text { Gross profit } & 131,000 & 129,000 & 114,000 \\\text { Net income } & 32,400 & 31,500 & 30,000\end{array}$$ Required:
A) Using horizontal analysis and 2014 as the base year, calculate the trend percentages for the items provided.Explain whether the trends are favourable or unfavourable for each item.

• A) Using horizontal analysis and 2014 as the base year, calculate the trend percentages for the items provided.Explain whether the trends are favourable or unfavourable for each item.

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Definitions:

Salary

A fixed regular payment, typically paid on a monthly or biweekly basis but often expressed as an annual sum, made by an employer to an employee.

Progressive Tax

A tax whose burden, expressed as a percentage of income, increases as income increases.

City Wage Taxes

Taxes imposed by some cities on the earnings of individuals working within their jurisdiction.

Federal Government Revenues

The income received by the federal government from various sources, including taxes, fees, and charges, used to fund public services and projects.