The Income Statements for the First Three Years of Operations

question 89

Essay

The income statements for the first three years of operations of Carol's Music Ltd. are provided below: Instructions
a) Is Carol's gross profit improving over the three years or not? Use horizontal analysis, with 2020 as the base year, to support your answer.
b) Provide one explanation for the decline in income from operations other than changes in gross profit. Support your answer using vertical analysis.
c) Although profit is decreasing, Carol has not been concerned because her cash flows have increased from year to year. Using the information available in the income statements, explain why this is so.

---

Definitions:

FSH

Follicle-stimulating hormone, a gonadotropin involved in the development of eggs in ovaries and sperm in testes.

LH Receptors

Proteins on the surface of certain cells that bind luteinizing hormone, playing a crucial role in reproductive system regulation.

GnRH Receptors

GnRH receptors are proteins located on the surface of certain cells that bind to gonadotropin-releasing hormone, playing a key role in the regulation of reproductive processes.

Hypothalamic Hormone

A type of hormone secreted by the hypothalamus that regulates various physiological processes, including temperature control, sleep, and hunger.