Horizontal and vertical analysis of the income statement for a retail company selling ladies clothing is shown below.

Instructions
(a) How effectively has the company controlled its cost of goods sold and operating expenses over the four-year period?
(b) Identify any other income statement components that have significantly change dover the four-year period for the company.
(c) Identify any additional information that might be helpful to you in your analysis of this company over the four-year period.
TAKING IT FURTHER
Explain how a horizontal analysis is affected if an account (a) has no value in a base year and a value in the next year, or (b) has a negative value in the base year and a positive value in the next year.

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TARA CORPORATION Horizontal Income Statement Year Ended January 31 Net sales Cost of goods sold Gross profit Operating expenses Profit from operations Other revenues and expenses 2017 140.0% 148.3% 127.5% 171.4% 93.3% 2016 111.0% 113.3% 107.5% 133.1% 876% 2015 114.0% 116.7% 110.0% 126.9% 96.9% 2014 100.0% 100.0% 100.0% 100.0% 100.0% Interest expense Other revenue Profit before income tax Income tax expense Profit 40.0% 240.0% 140.0% 160.0% 135.2% 60.0% 140.0% 11 0.8% 11 6.0% 109.5% 80.0% 200.0% 11 3.8% 124.0% 111.4% 100.0% 100.0% 100.0% 100.0% 100.0% TARA CORPORATION Vertical Income Statement Year Ended January 31 Net sales Cost of goods sold Gross profit Operating expenses Profit from operations Other revenues and expenses 2017 100.0% 636% 36.4% 21.4% 15.0% 2016 100.0% 61.2% 38.8% 21.0% 17.8% 2015 100.0% 61.4% 38.6% 19.5% 19.1% 2014 100.0% 60.0% 40.0% 17.5% 22.5% Interest expense Other revenue Profit before income tax Income tax expense Profit (2.9)% 0.9% 13.0% 2.9% 10.1% (5.4)% 0.6% 13.0% 26% 10.4% (7.0)% 0.9% 13.0% 2.7% 10.3% (10.0)% 0.5% 13.0% 25% 10.5%