Horizontal Analyses Slusher Company presents the following condensed comparative income statements for 2006, 2007, and 2008:
|
2008 |
2007 |
2006 |
|
|
Sales (net) |
$120,000 |
$100,000 |
$85,000 |
|
Cost of goods sold |
72,000 |
55,000 |
45,000 |
|
Gross profit |
$48,000 |
45,000 |
$40,000 |
|
Operating expenses |
22,000 |
20,000 |
18,000 |
|
Operating income |
$26,000 |
25,000 |
$22,000 |
|
Other items |
|||
|
Dividend revenue |
400 |
500 |
200 |
|
Interest expense |
1,200 |
1,000 |
500 |
|
Income before income taxes |
$25,200 |
$24,500 |
$21,700 |
|
Income tax expense |
8,200 |
8,000 |
6,000 |
|
Net income |
$17,000 |
$16,500 |
$15,700 |
|
Number of common shares |
6,000 |
6,000 |
5,000 |
|
Earnings per share |
$2.83 |
$2.75 |
$3.14 |
Required
Based on the preceding information for Slusher Company, prepare horizontal analyses for the years 2006, 2007, and 2008 using (1) a year to year approach and (2) a base year to date approach. Do your analyses reveal any favorable or unfavorable trends?