The Following Selected Amounts Were Extracted from the Financial Statements

question 55

Essay

The following selected amounts were extracted from the financial statements of Missinger Corporation.
$\begin{array}{lrrrr}& \text { Year 4 } & \text { Year 3 } & \text { Year 2 } & \text { Year 1 } \\\text { Net sales } & \$ 720,000 & \$ 690,000 & \$ 660,000 & \$ 600,000 \\\text { Gross margin } & 464,000 & 448,000 & 436,000 & 400,000 \\\text { Net income } & 113,000 & 111,000 & 108,000 & 100,000\end{array}$
a.Prepare a trend analysis for net sales,gross margin,and net income using Year 1 as the base year.
b.For net sales,gross margin,and net income:
1.Calculate the percentage change from Year 1 to Year 2.
2.Calculate the percentage change from Year 2 to Year 3.
c.For each of the four years,compute the percentage relationship of gross margin to net sales and the relationship of net income to net sales.
d.Identify which requirement(s)above involve(s):
1.Horizontal analysis
2.Vertical analysis
Round all answers to the nearest tenth of 1 percent.
a. Prepare a trend analysis for net sales, gross margin, and net income using Year 1 as the base year.
b. For net sales, gross margin, and net income:

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Definitions:

Large Bonus

A significant extra payment given to employees as a reward for their performance, often calculated as a percentage of their annual salary or based on the achievement of specific targets.

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An individual's subjective evaluation of their own worth or value.

Control Behavior

The actions or practices aimed at regulating, managing, or commanding the conduct of individuals or groups.

Playing Tennis

Engaging in a sport involving two or four players who use rackets to hit a ball over a net, aiming to score points against opponents.