The Clovland Corporation presents the following comparative income statements for 2000 and 2001:

Clovland Corporation Comparative Income Statements For Years Ended December 31 2000 2001 Sales (net) $90,000 $108,000 Cost of goods sold (45,000) (60,000)
Gross profit $45,000 $ 48,000 Operating expenses 20,000) (22,000)
Pretax operating income $25,000 $ 26,000 Income tax expense (10,000) (10,400)
Net Income $15,000 $ 15,600 Number of common shares 6,800 7,000 Earnings per share Samael Sits 2.23 Required: (1) Based on the preceding information, prepare a horizontal analysis for the years 2000 and 2001. (Hint: To the right of the income statements, add an Amount column and a Percent column like 10-35.) (2) Calculate the corporation's profit margin for each year.What is this ratio generally used for, and what does it indicate for the Clovland Corporation? TK-1