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4.Contrast the circumstances where horizontal analysis would be an effective analysis tool with those where common-sized analysis would be more useful.

5.The following selected amounts were extracted from the financial statements of Flamingo Corporation.

Year 4Year 3Year 2Year 1

Net sales$175,000$170,000$165,000$150,000

Cost of goods sold109,000104,500100,50093,000

Gross margin66,00065,50064,50057,000

Prepare a trend analysis for net sales, cost of goods sold, and gross margin. (Round answers to the nearest tenth of 1 percent.) Use Year 1 as the base year.

6.The following selected amounts were extracted from the financial statements of H225 Corporation.

Year 4Year 3Year 2Year 1

Net sales$350,000$340,000$330,000$300,000

Cost of goods sold218,000209,000201,000186,000

Gross margin132,000131,000129,000114,000

Compute the following for net sales, cost of goods sold, and gross margin. (Round answers to the nearest tenth of 1 percent.)

a. The percentage change from Year 1 to Year 2

b. The percentage change from Year 2 to Year 3

c. The percentage change from Year 3 to Year 4

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