Exercise 14-1A (Algo) Horizontal analysis LO 14-1 Zachary Corporation reported the following operating results for two consecutive years: Required a. Compute the percentage changes in Zachary Corporation's income statement components between the two years. Note: Negative amounts should be indicated by a minus sign. Round your answers to 1 decimal place. (i.e., .234 should be entered as 23.4). ZACHARY CORPORATION Income Statements Year 3 Year 2 Percentage Change Sales Cost of goods sold Gross margin Operating expenses Income before taxes $ 1,296,000 $ 1,002,500 29.4 % 797,040 601,500 498,960 401,000 + 303,500 199,000 195,460 202,000 Income taxes 61,500 52,700 Net income (loss) $ 133,960 $ 149,300 % Selected data from Fanning Company follow: Accounts receivable Balance Sheets As of December 31 Allowance for doubtful accounts Net accounts receivable Inventories, lower of cost or market. Net credit sales Net cash sales Net sales Cost of goods sold Income Statement Year 3 $ 405,000 (20,250) $ 384,750 $ 476,500 For the Years Ended December 31 Selling, general, and administrative expenses Other expenses Total operating expenses Required a. Compute the accounts receivable turnover for Year 3. b. Compute the inventory turnover for Year 3. c. Compute the net margin for Year 2. Year 2 $377,000 (15,080) $ 361,920 $437,000 Year 3 Year 2 $ 2,017,000 $ 1,753,000 419,000 2,436,000 1,608,000 239,600 39,100 315,000 2,068,000 1,436,000 215,400 22,600 $ 1,886,700 $ 1,674,000 Note: For all requirements, round your answers to 2 decimal places. Answer is complete but not entirely correct. a. Accounts receivable turnover b. Inventory turnover c. Net margin 5.40 times 3.52 times 22.55%