Perform a Horizontal Analysis of the Following Company's Income Statement

question 133

Essay

Perform a horizontal analysis of the following company's income statement. Include both the amount and the percentage of change for each account.
$$\begin{array} { | l | r | r | r | l | } \hline \text { Account } & \mathbf { 2 0 1 1 } & \mathbf { 2 0 1 0 } & \text { Change Amount } & \text { Change Percent } \\\hline \text { Net sales revenue } & \$ 557,000 & \$ 500,000 & & \\\hline \text { Cost of goods sold } & 400,000 & 395,000 & \\\hline \text { Gross profit } & 157,000 & 105,000 & & \\\hline \text { Selling and general expenses } & 70,000 & 50,000 & \\\hline \text { Net income before income tax } & 87,000 & 55,000 & \\\hline \text { Income tax expense } & 24,000 & 16,500 & \\\hline \text { Net income } & \$ 63,000 & \$ 38,500 & & \\\hline\end{array}$$

---

Definitions:

Terminated

The end of an employee's employment due to dismissal or discharge by the employer, often for cause or due to organizational changes.

Apparent Authority

The appearance or assumption of authority based on the actions or statements of the principal, leading third parties to believe that a representative has authority to act.

Bound

To be legally or morally obligated; often referring to the commitments made in a contract or agreement.

Purchased

Purchased refers to the acquisition of goods or services in exchange for money or other consideration.