The Gap Inc. statements of earnings from its 1998 annual report is presented in Exhibit 5-3.

Required

a. Using the income statement, prepare a vertical common-size analysis for 1999, 1998, and 1997. Use net sales as a base.

b. Using the income statement, prepare a horizontal common-size analysis for 1999, 1998, and 1997. Use 1997 as the base.

c. Comment on significant trends that appear in

(a) and (b).