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Describe and illustrate the use of horizontal analysis in evaluating a company's performance and financial condition. Chipotle Mexican Grill, Inc. (CMG) is a quick-service restaurant

Describe and illustrate the use of horizontal analysis in evaluating a company's performance and financial condition.Chipotle Mexican Grill, Inc. (CMG)is a quick-service restaurant providing a focused menu of burritos, tacos, and salads. Chipotle's income statements for the end of two recent years are as follows:

https://college.cengage.com/nextbook/shared/finance/warren_9781337902663/images/9781337902663_ch2-056-t2.png

  1. A horizontal analysis of the two income statements. (Horizontal Analysis is taking the difference between year 2 and year 1 and dividing by the "base" year, so year 1).Example Year 1 Revenue to Year 2 Revenue, displays a decrease: ($3,904,385 - $4, 501, 223)/$4,501,223) = (13.25%) decrease in revenue.The (parenthesis) for the expenses, merely means subtractions from revenue.
  2. Interpret the horizontal analysis.
  3. Why Chipotle's revenues and operating income may have decreased so significantly in Year 2?
  4. Any recent marketing that Chipotle has taken on that may be an attempt to increase their revenue?

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