Income statement data for Grendel Images Company for the years ended December 31, 2010 and 2009, are as follows:
2010 2009
Sales $196,000 $160,000
Cost of goods sold 170,100 140,000
Gross profit $ 25,900 $ 20,000
Selling expenses $ 12,200 $ 10,000
Administrative expenses 9,750 8,000
Total operating expenses $ 21,950 $ 18,000
Income before income tax $ 3,950 $ 2,000
Income tax expense 2,000 1,000
Net income $ 1,950 $ 1,000
a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for 2010 when compared with 2009. Round to one decimal place.
b. What conclusions can be drawn from the horizontal analysis?