Faso Fabricating, Inc. and Spinoza Fabrication Corp. are in the same industry and are located in the same region of the country. They have condensed income statements as shown.
Using horizontal analysis, calculate the percent change for net income for each company. Round percentages to one decimal place.

Question

Faso Fabricating, Inc. and Spinoza Fabrication Corp. are in the same industry and are located in the same region of the country. They have condensed income statements as shown.  
 Using horizontal analysis, calculate the percent change for net income for each company. Round percentages to one decimal place.

Quizplus · Accepted Answer

Faso percent change in net income = (Net income in Year 2 - Net income in Year 1) / Net income in Year 1 = ($77,000 - $93,000) / $93,000 = -17.2%; Spinoza percent change in net income = (Net income in Year 2 - Net income in Year 1) / Net income in Year 1 = ($117,000 - $110,000) / $110,000 = 6.4%