The Following Items Were Taken from the Financial Statements of Kramer

question 167

Essay

The following items were taken from the financial statements of Kramer Manufacturing, Inc., over a three-year period: $\begin{array}{lrrr}\text { Item }&2015&2014&2013\\\text { Net Sales } & \$ 226,000 & \$ 212,000 & \$ 200,000 \\\text { Cost of Goods Sold } & 150,000 & 140,000 & 125,000\\\text { Gross Profit }&\$76,000&\$72,000&\$75,000\end{array}$ Instructions
Using horizontal analysis and 2013 as the base year, compute the trend percentages for net sales, cost of goods sold, and gross profit. Explain whether the trends are favorable or unfavorable for each item.

---

Definitions:

Present Value

The present value of a future amount of money or series of cash flows, calculated using a designated rate of return.

Guaranteed Amount

A specific sum assured to be paid, often in the context of insurance or investment products, regardless of variable conditions.

Lease Payments

Periodic payments made by a lessee to a lessor for the use of an asset.

Inventory Cost

The total cost incurred to acquire inventory and bring it to its current condition and location, including purchase prices, freight, and handling fees.