The following items were taken from the financial statements of Mike Inc., over a five-year period: $$\begin{array} { c c c c c c }
\text { Item } & 2022 & 2021 & 2020 & 2019 & 22018 \
\text { Net Sales } & \$ 980,000 & \$ 900,000 & \$ 650,000 & \$ 550,000 & \$ 500,000 \
\text { Cost of Goods Sold } & 700,000 & 640,000 & 480,000 & 420,000 & 400,000 \
\text { Gross Profit } & \$ 280,000 & \$ 260,000 & \$ 170,000 & \$ 130,000 & \$ 100,000
\end{array}$$ Instructions
Using horizontal analysis and 2018 as the base year, calculate the trend percentages for net sales, cost of goods sold, and gross profit. Explain whether the trends are favourable or unfavourable for each item.

Question

The following items were taken from the financial statements of Mike Inc., over a five-year period: $$\begin{array} { c c c c c c } 
\text { Item } & 2022 & 2021 & 2020 & 2019 & 22018 \
\text { Net Sales } & \$ 980,000 & \$ 900,000 & \$ 650,000 & \$ 550,000 & \$ 500,000 \
\text { Cost of Goods Sold } & 700,000 & 640,000 & 480,000 & 420,000 & 400,000 \
\text { Gross Profit } & \$ 280,000 & \$ 260,000 & \$ 170,000 & \$ 130,000 & \$ 100,000
\end{array}$$ Instructions
Using horizontal analysis and 2018 as the base year, calculate the trend percentages for net sales, cost of goods sold, and gross profit. Explain whether the trends are favourable or unfavourable for each item.

Quizplus · Accepted Answer

The Answer of The following items were taken from the financial statements of Mike Inc., over a five-year period: $$\begin{array} { c c c c c c } 
\text { Item } & 2022 & 2021 & 2020 & 2019 & 22018 \
\text { Net Sales } & \$ 980,000 & \$ 900,000 & \$ 650,000 & \$ 550,000 & \$ 500,000 \
\text { Cost of Goods Sold } & 700,000 & 640,000 & 480,000 & 420,000 & 400,000 \
\text { Gross Profit } & \$ 280,000 & \$ 260,000 & \$ 170,000 & \$ 130,000 & \$ 100,000
\end{array}$$ Instructions
Using horizontal analysis and 2018 as the base year, calculate the trend percentages for net sales, cost of goods sold, and gross profit. Explain whether the trends are favourable or unfavourable for each item.

The Following Items Were Taken from the Financial Statements of Mike