A. The following items were taken from the financial statements of Salley, Inc. over a three year period: Using the horizontal analysis and 2016 as the base year, compute the change in percentages for net sales, cost of goods sold, gross profit, operating expenses and net income. Explain whether the trends are favorable or unfavorable for each item. Item 2018 P Net Sales 825,000 Cost of Goods Sold 630,000 Gross Profit 195,000 Operating Expenses 100,000 Net Income P 95,000 2017 740,000 580,000 160,000 80,000 P 80,000 2016 675,000 535,000 140,000 75,000 P 65,000

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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A. The following items were taken from the
financial statements of Salley, Inc. over a three
year period: Using the horizontal analysis and
2016 as the base year, compute the change in
percentages for net sales, cost of goods sold,
gross profit, operating expenses and net
income. Explain whether the trends are
favorable or unfavorable for each item.
Item
2018
Net Sales
825,000
Cost of Goods Sold
630,000
Gross Profit
195,000
Operating Expenses
100,000
Net Income
P 95,000
2017
P
740,000
580,000
160,000
80,000
P
80,000
2016
675,000
535,000
140,000
75,000
P
65,000
Transcribed Image Text:A. The following items were taken from the financial statements of Salley, Inc. over a three year period: Using the horizontal analysis and 2016 as the base year, compute the change in percentages for net sales, cost of goods sold, gross profit, operating expenses and net income. Explain whether the trends are favorable or unfavorable for each item. Item 2018 Net Sales 825,000 Cost of Goods Sold 630,000 Gross Profit 195,000 Operating Expenses 100,000 Net Income P 95,000 2017 P 740,000 580,000 160,000 80,000 P 80,000 2016 675,000 535,000 140,000 75,000 P 65,000
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