The Clovland Corporation presents the following comparative income statements for 2014 and 2015: a. Based on the preceding information, prepare a horizontal analysis for the years 2014 and 2015. b. Calculate the corporations profit margin for each year. What is this ratio generally used for, and what does it indicate for the Clovland Corporation?

CLOVLAND CORPORATION Comparative Income Statements For Years Ended December 31 2014 2015 $90,000 (45,000) $45,000 (20,000) $25,000 (10,000) $15,000 Sales (net) Cost of goods sold Gross profit Operating expenses Pretax operating income Income tax expense Net Income $108,000 (60,000) $ 48,000 (22,000) $ 26,000 (10,400) $ 15,600 6,800 $ 2.21 Number of common shares Earnings per share 7,000 $2.23