Your accountant friend reveals that the company whose information you have been working on is actually a company he is thinking of investing in. What advice and insight do you have for your friend?

Using only the information from your horizontal analysis of the comparative income statement, complete the following sentences.

Net incomeSalesCost of goods soldOther expense (interest)

 has decreased significantly from 20Y5 to 20Y6, even though 

net incomesalescost of goods soldselling expenses

 has increased. However, 

net incomesalescost of goods sold

 has also 

increaseddecreasednot changed

, which slowed the increase in 

gross profitnet incomesalestotal operating expenses

. In addition, 

selling expensesincome tax expenseother expense (interest)

 has increased at a faster rate. The company appears 

to be strugglingto be too heavilyleveragedto be a good investmentto be taking the right stepsto be growing

.

Answer rating: 100% (QA)

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