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JET2-Task1
A.1.a Horizontal analysis

Horizontal analysis is essentially an analysis on the trend of the financials of the company. It shows changes in the amounts of the amounts over a period of time. In the financial statement provided, the horizontal analysis is between years six and seven, and years seven and eight; respectively. When analyzing the income statement provided with the task, several strengths and weaknesses are very apparent. They will be broken down individually and analyzed separately. Horizontal analysis is calculated by using the formula below ("Horizontal Analysis," n.d.)

Income Statement
Revenue: Net sales between years 6 and 7 demonstrate a 33.3% increase or an increase in approximately $1.5 million. This is a strength because there were positive sales during this time frame. Positive sales are always a positive finding in business. However, sales between years 7 and 8 demonstrate a decrease in net sales of -15% or $897,000. This is a weakness due to the overall sales being down. Cost of Goods Sold between years 6 and 7 demonstrates an increase of 31.8% or $1,048,000. The costs associated with manufacturing goods are always going to be a big expense. While the cost associated may appear to be a weakness for the company, it actually demonstrates strength for the company. The reason being is the percent change in sales. It closely represents the increase in sales during the same period. If the sales number did not adequately correlate with the growth, this would be a weakness for the company and would demonstrate a lack of efficiency or an increase in the price for raw goods. Years 7 and 8 also closely correlate with the overall decrease in sales at -14.5% or $630,400. Again, a loss in sales isn’t a very good thing, but the net sales and cost of goods closely correlate the change in percentage points which demonstrates

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