The Nichols Corporation data for the current year: What would a horizontal analysis report with respect to net income before income tax expense and net income?

Question

The Nichols Corporation data for the current year:  What would a horizontal analysis report with respect to net income before income tax expense and net income?

Quizplus · Accepted Answer

A horizontal analysis report compares financial data from one period to another. Therefore, we need to compare the data from the current year to the previous year. The statement "both net income before income tax expense and net income increased by $128,400" cannot be determined without the previous year's data. Option C about the current ratio is unrelated to the question. 
Therefore, the best choice is D, which indicates an increase in both net income before income tax expense and net income of 14.00%.

The Nichols Corporation Data for the Current Year: What