Hammond Corporation reported the following operating results for two consecutive years.
|
2008
|
2007
|
Percentage Change
|
|
Sales
|
$1,250,000
|
$1,000,000
|
|
|
Cost of goods sold
|
750,000
|
600,000
|
|
|
Gross margin
|
500,000
|
400,000
|
|
|
Operating expenses
|
300,000
|
200,000
|
|
|
Income before taxes
|
200,000
|
200,000
|
|
|
Income taxes
|
61,000
|
53,000
|
|
|
Net income
|
$ 139,000
|
$ 147,000
|
|
Required
a. Compute the percentage changes in Hammond Corporation's income statement components between the two years.
b. Comment on apparent trends disclosed by the percentage changes computed in Requirement a.