Comparative Income Statements for Pearle Company Are Provided Below Required:
Perform a Horizontal Analysis of Pearle Company's Income Statement

question 54

Short Answer

Comparative income statements for Pearle Company are provided below:
$\begin{array}{c}\text {Pearle Company}\\\text {Comparative Income Statement}\\\text {Years Ended December 31,}\\\begin{array}{lrr}&\text {Year 2}&\text {Year 1}\\\text { Sales } & \$ 595,000 & \$ 532,200 \\\text { Less cost of goods sold } & 386,200 & 357,650 \\\text { Gross margin } & 208,800 & 174,550 \\\text { Less operating expenses } & 108,950 & 99,770 \\\text { Income before taxes } & 99,850 & 74,780 \\\text { Income taxes } & 39,940 & 29,912 \\\text { Net income } & \$ 59,910 & \$ 44,868\end{array}\end{array}$ Required:
Perform a horizontal analysis of Pearle Company's income statement by computing horizontal percentages for each item. Round your answer to one decimal place (i.e., 22.5%).

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