The income statement for Labelle Ltd. is shown below:

Instructions
(a) Using horizontal analysis, calculate the horizontal percentage of a base-year amount, assuming 2016 is the base year.
(b) Using vertical analysis, calculate the percentage of the base amount for each year.
(c) Identify any significant changes from 2016 to 2018. Explain the trends in your analysis that management should be concerned about and the trends that management would be pleased to see.

Transcribed Image Text:

LABELLE LTD Income Statement Year Ended December 3:1 (in millions) 20182017 2016 $1,600 $1,400 $1,200 900 750 600 700 650 600 520 410 400 180 240 200o 80 50 40 Income before incometax00 190 160 Sales Cost of goods sold Gross profit Operating expense:s ncome from operations Interest expense Income tax expense Net income 25 48 4 $75 $142 120