The following items were taken from the financial statements of Mike Inc., over a five-year period:

Item202220212020201922018Net Sales$ 980,000$ 900,000$ 650,000$ 550,000$500,000

Cost of Goods Sold700,000640,000480,000420,000400,000Gross Profit$ 280,000$ 260,000$ 170,000$ 130,000$100,000

Instructions

Using horizontal analysis and 2018 as the base year, calculate the trend percentages for net sales, cost of goods sold, and gross profit. Explain whether the trends are favourable or unfavourable for each item.