Question Details

Compute the net income reported by Eaton Corporation 



1.	Eaton Corporation had net income of $6,000,000 in 2010. Using 2014 as the base year, net income decreased by 70% in 2013 and increased by 140% in 2014.

Required: Compute the net income reported by Eaton Corporation for 2013 and 2014.


2.	The following items were taken from the financial statements of Ritz Inc., over a 4-year period:

Item	2014	2013	2012	2011
Net Sales	$800,000	$700,000	$550,000	$500,000
Cost of Goods Sold	  560,000	  500,000	  420,000	  400,000
Gross Margin	$240,000	$200,000	$130,000	$100,000

Required: Using horizontal analysis and 2011 as the base year, compute the trend percentages for net sales, cost of goods sold, and gross profit. Explain whether the trends are favorable or unfavorable for each item.





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