A horizontal and vertical analysis of the income statement for a retail company selling a wide variety of general merchandise is shown below:

Instructions
(a) How effectively has the company controlled its cost of goods sold over the four-year period?
(b) In a vertical analysis, the company's income before income tax has remained unchanged at 13% of revenue over the four-year period. Yet, in a horizontal analysis, income before income tax has grown 40% over that period of time. Explain how this is possible.
(c) Identify any other key financial statement components that have changed over the four-year period for the company.
(d) Identify any additional information that might be helpful to you in your analysis of this company over the four-year period.

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RETAIL CORPORATION Horizontal Income Statement Year Ended January 31 2018 2017 2016 2015 140.0% 111.0% 114.0% 100.0% 148.3% 113.3% 116.7% 100.0% 127.5% 107.5% 110.0% 100.0% 171.4% 133.1% 126.9% 100.0% 93.3% 87.6% 96.9% 100.0% Revenuee Cost of goods sold Gross profit Operating expenses ncome from operations Other revenues and expenses Interest expense Other revenue Income before income tax Income tax expense Net income 40.0% 60.0% 80.0% 100.0% 240.0% 140.0% 200.0% 100.0% 140.0% 160.0% 116.0% 124.0% 100.0% 135.2% 109596 111.4% 100.0% 110.8% 113.8% 100.0% RETAIL CORPORATION Vertical Income Statement Year Ended January 31 2018201720162015 100.0% 100.0% 100.0% 100.0% 63.6% 61.2% 61.4% 60.0% 36.4% 38.8% 38.6% 40.0% 21.496 21.096 19.596 17.596 15.0% 17.8% 19.1% 22.5% Revenue Cost of goods sold Gross profit Operating expenses ncome from operations Other revenues and expenses Interest expense Other revenue Income before income tax Income tax expense Net income (2.996) (5.496) (7.096) (10.096) 0.0% 0.6% 0.0% 0.5% 13.0% 13.0% 13.0% 13.0% 2.9% 2.5% 2.7% 2.5% 10.16 10.4 10.3 10.5%