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

question 79

Essay

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%).

---

Definitions:

Technological Change

The process of innovation and development in technology, leading to new products, improved processes, and increased efficiency.

Production Processes

The methods and sequences of activities involved in the manufacture of goods, encompassing everything from material selection to final output.

Economic Growth

An increase in the capacity of an economy to produce goods and services, compared from one period of time to another.

Emerging Economies

Countries with developing industrial bases, experiencing rapid economic growth and increasing involvement in the global market.