Please help with this question, thanks so much!! Pippin Piping Co. manufactures

Question

Please help with this question, thanks so much!!

Pippin Piping Co. manufactures decorative fabric trims. The company's financial statements follow Pippin Piping Co. Comparative Income Statements For the Years Ended December 31 2016 2015 2014 Sales revenue Cost of goods sold Gross margin Operating expenses Operating income Other revenue $576,600 $523,000 $484,200 291,000 259,200 234,300 285,600 263,800 249,900 106,200 104,600 104,100 179,400 159,200 145,800 22,500 11,200 15,900 10,500 23,900 11,900 190,700 164,600 157,800 Income tax expense (40%) 76,280 65,840 63,120 $114,420 $98,760$94,680 Interest expense Income before income tax Net income

Explanation / Answer

a) Horizontal Analysis for 2016

% Change of each item is calculated by dividing $ change of each item by 2015 figures of that respective item and multiplied by 100.

Income Statement 2016 2015 $ Change % Change Sales Revenue 576,600 523,000 53,600 10.25% Cost of Goods Sold 291,000 259,200 31,800 12.27% Gross Margin 285,600 263,800 21,800 8.26% Operating expenses 106,200 104,600 1,600 1.53% Operating Income 179,400 159,200 20,200 12.69% Other revenue 22,500 15,900 6,600 41.51% Interest expense 11,200 10,500 700 6.67% Income before income tax 190,700 164,600 26,100 15.86% Income tax expense (40%) 76,280 65,840 10,440 15.86% Net Income 114,420 98,760 15,660 15.86%

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