The Following Selected Amounts Were Extracted from the Financial Statements

Essay

The following selected amounts were extracted from the financial statements of Clay Corporation. (Round all answers below to one decimal place.)

a. Prepare a trend analysis for net sales, gross margin, and net income using Year 1 as the base year.

b. For net sales, gross margin, and net income:
1. Calculate the percentage change from Year 1 to Year 2.
2. Calculate the percentage change from Year 2 to Year 3.
c. For each of the four years, compute the percentage relationship of gross margin to net sales and the relationship of net income to net sales.

d. Identify which requirement(s) above involve(s):
1. Horizontal analysis
2. Vertical analysis
Round all answers to the nearest tenth of 1 percent.