Exercise 12-3 (Static) Prepare horizontal analysis (LO12-2)
The income statements for Federer Sports Apparel for 2025 and 2024 are presented below.
Required:
Prepare a horizontal analysis for 2025 using 2024 as the base year. (Decreases should be indicated with a minus sign. Round your percentage answers to 1 decimal place.)
FEDERER SPORTS APPAREL
Income Statement
For the Years Ended December 31
Year
2025 2024
Increase (Decrease)
Amount %
Net sales $ 18,800,000 $ 15,500,000
Cost of goods sold 13,200,000 7,000,000
Gross profit 5,600,000 8,500,000
Operating expenses 1,600,000 1,200,000
Depreciation expense 1,000,000 1,000,000
Inventory write-down 200,000
Loss (litigation) 1,500,000 300,000
Income before tax 1,300,000 6,000,000
Income tax expense 450,000 2,000,000
Net income $ 850,000 $ 4,000,000