Gordon has had the following financial results for the last four years:

                                            Year 1         Year 2               Year 3                    Year 4

Sales                          $1,250,000      $1,300,000         $1,359,000         $1,400,000

Cost of Goods Sold     750,000              785,000             825,000            850,000

Gross Profit                  $500,000             $515,000           $534,000          $550,000

Inflation Factor                1.00                       1.03                         1.07             1.10

Gordon has analyzed these results using vertical common-size analysis to determine trends. The performance of Gordon can best be characterized by which one of the following statements?

Group of answer choices

The common-size gross profit percentage has decreased as a result of an increasing common-size trend in cost of goods sold.

The common-size trend in sales is increasing and is resulting in an increasing trend in the common-size gross profit margin.

The common-size trend in cost of goods sold is decreasing, which is resulting in an increasing trend in the common-size gross profit margin.

The increased trend in the common-size gross profit percentage is the result of both the increasing trend in sales and the decreasing trend in cost of goods sold.

Answer rating: 100% (QA)

To determine the performance of Gordon using vertical commonsize analysis we need to compare the cha... View the full answer