Horizontal Analysis. Smith Corporation provides the following comparative income statement:
Smith Corporation
Comparative Income Statement
For the Years Ended December 31, 20X3 and 20X2
|
20X3
|
20X2
|
|
Sales
|
$570,000
|
$680,000
|
|
Cost of goods sold
|
200,000
|
170,000
|
|
Gross profit
|
$370,000
|
$510,000
|
|
Operating expenses
|
100,000
|
210,000
|
|
EBIT
|
$270,000
|
$300,000
|
(a) Calculate the percentage change using horizontal analysis and (b) evaluate the results.