Answer:
When using horizontal analysis, figures are compared across different years with the subsequent year differences with the base year figures being a percentage of the base year's figures.
12/31/2017 12/31/2016 Difference Percentage
Net sales $600,000 $500,000 $100,000 20.0%
Cost of goods sold <u>$414,000 $350,000 </u> $64,000 18.3%
Gross profit $186,000 $150,000 $36,000 24.0%
Operating expenses <u> $150,000 $120,000</u> $30,000 25.0%
Net income $36,000 $30,000 $6,000 20.0%
Net sales percentage = 100,000 / 500,000 = 20%
Cost of goods sold = 64,000 / 350,000 = 18.3%
Gross profit = 36,000 / 150,000 = 24%
Operating expenses = 30,000 / 120,000 = 25%
Net income = 6,000 / 30,000 = 20%
