Switch the lens from dollars to year-over-year change to common-size and watch the same statements tell a different story.
| Line | 2026 | 2025 |
|---|---|---|
| Net sales | $600,000 | $500,000 |
| Cost of goods sold | $360,000 | $290,000 |
| Gross profit | $240,000 | $210,000 |
| Operating expenses | $150,000 | $140,000 |
| Income from operations | $90,000 | $70,000 |
| Interest expense | $10,000 | $10,000 |
| Income before taxes | $80,000 | $60,000 |
| Income tax expense | $20,000 | $15,000 |
| Net income | $60,000 | $45,000 |
| Line | 2026 | 2025 |
|---|---|---|
| Cash | $40,000 | $30,000 |
| Short-term investments | $10,000 | $10,000 |
| Accounts receivable | $70,000 | $50,000 |
| Merchandise inventory | $90,000 | $70,000 |
| Prepaid expenses | $10,000 | $10,000 |
| Total current assets | $220,000 | $170,000 |
| Plant assets, net | $380,000 | $330,000 |
| Total assets | $600,000 | $500,000 |
| Current liabilities | $110,000 | $80,000 |
| Long-term debt | $140,000 | $120,000 |
| Total liabilities | $250,000 | $200,000 |
| Common stock, $10 par, 20,000 shares | $200,000 | $200,000 |
| Retained earnings | $150,000 | $100,000 |
| Total equity | $350,000 | $300,000 |
| Total liabilities and equity | $600,000 | $500,000 |
Gross margin fell from 42% to 40% · operating expenses fell from 28.0% to 25.0% of sales · net margin rose to 10%
Touch the instrument to see what to notice.