The following items were taken from the financial statements of McGonigal Inc. over a four-year period:

Item 2022 2021 2020 2019

Sales $650,000 $580,000 $530,000 $500,000

Cost of goods sold 520,000 440,000 380,000 340,000

Gross profit $130,000 $140,000 $150,000 $160,000

Instructions

Using horizontal analysis and 2019 as the base year, calculate the horizontal percentages of a base period for sales, cost of goods sold, and gross profit. Explain whether the trends are favourable or unfavourable for each item.