The Following Selected Amounts Were Extracted from the Financial Statements

question 5

Essay

The following selected amounts were extracted from the financial statements of Missinger Corporation.
$\begin{array}{|l|l|l|l|l|}\hline & \text { Year 4 } & \text { Year 3 } & \text { Year 2 } & \text { Year l } \\\hline & & & & \\\hline \text { Net sales } & \$ 720,000 & \$ 690,000 & \$ 660,000 & \$ 600,000 \\\hline \text { Grossmargin } & 464,000 & 448,000 & 436,000 & 400,000 \\\hline \text { Net income } & 113,000 & 111,000 & 108,000 & 100,000 \\\hline & & & & \\\hline\end{array}$ 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.

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Definitions:

Annual Contributions

Regular amounts added to an investment, savings account, or retirement fund once every year.

Compounded Semi-Annually

Interest that is compounded semi-annually is applied to the principal amount twice a year, leading to an increase in the overall amount of interest earned compared to simple interest.

RRSP

Registered Retirement Savings Plan, a tax-deferred account aimed at helping Canadians save for retirement.

Annual Contributions

Payments or deposits made into a financial account or investment plan once every year.