Question

The following is a summary of information presented on the financial statements of a company on December​ 31, 2025. Account 2025 2024 Net Sales Revenue $601,000 $504,000 Cost of Goods Sold ​456,000 ​405,000 Gross Profit 145,000 99,000 Selling Expenses ​51,000 ​54,000 Net Income Before Income Tax Expense 94,000 45,000 Income Tax Expense ​39,000 ​23,000 Net Income $55,000 $22,000 With respect to gross​ profit, a horizontal analysis reveals​ ________. (Round your answer to two decimal​ places.)

Answer 1

Answer:

Changes in gross profit from 2024 to 2025 = Gross profit of 2025 - Gross profit of 2024

Changes in gross profit from 2024 to 2025 = $145,000 - $99,000

Changes in gross profit from 2024 to 2025 = $46,000

Horizontal analysis formula:

% change in gross profit = Change in parameter/Base year parameter * 100%

% change in gross profit = $46,000/$99,000 * 100

% change in gross profit = 46.46464646464646%

% change in gross profit = 46.46%

With respect to gross profit, a horizontal analysis reveals a 46.46% increase in gross profit from 2024 to 2025.