Bradburn Corporation was formed five years ago through a public subscription of common stock. Daniel Brown, who owns 15% of the common stock, was one of the organizers of Bradburn and is its current president. The corporation has been successful, but it currently is experiencing a shortage of funds. On June 10, 2026, Daniel Brown approached the Topeka National Bank, asking for a 24-month extension on two $35,000 notes, which are due on June 30, 2026, and September 30, 2026. Another note of $6,000 is due on March 31, 2027, but he expects no difficulty in paying this note on its due date. Brown explained that Bradburn's cash flow problems are due primarily to the company's desire to finance a $300,000 plant expansion over the next two fiscal years through internally generated funds.

The commercial loan officer of Topeka National Bank requested the financial reports for the last two fiscal years.

2026 2025

Sales revenue $3,000,000 $2,700,000

Cost of goods sold 1,530,000 1,425,000

Gross margin 1,470, 000 1,275,000

Operating expenses 860,000 780,000

Income before income taxes 610,000 495,000

Income taxes (40%) 244,000 198,000

Net income $ 366,000 $ 297,000

*Depreciation charges on the plant and equipment of $100,000 and $102,500 for fiscal years ended March 31, 2025 and 2026, respectively, are included in cost of goods sold.

Bradburn Corporation

Balance SheetMarch 31

2026

2025

Assets

Cash

$18,200

$12,500

Notes receivable

148,000

132,000

Accounts receivable (net)

131,800

125,500

Inventories (at cost)

105,000

50,000

Plant & equipment (net of depreciation)

1,449,000

1,420,500

Total assets

$1,852,000

$1,740,500

Liabilities and Stockholders' Equity

Accounts payable

$79,000

$91,000

Notes payable

76,000

61,500

Accrued liabilities

9,000

6,000

Common stock (130,000 shares, $10 par)

1,300,000

1,300,000

Retained earningsa

388,000

282,000

Total liabilities and stockholders' equity

$1,852,000

$1,740,500

*Cash, dividends were paid at the rate of $1 per share in fiscal year 2025 and $2 per share in fiscal year 2026.

1. Calculate the percentage change in sales from the fiscal year 2025 to 2026.
2. Calculate the percentage change in cost of goods sold from the fiscal year 2025 to 2026.
3. Calculate the percentage change in gross margin from the fiscal year 2025 to 2026.
4. Calculate the percentage change in net income after taxes from the fiscal year 2025 to 2026.

Answer rating: 100% (QA)

Answer To calculate the percentage changes I will use the following formula Percentage change New va... View the full answer