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Hammond Corporation reported the following operating results for two consecutive years.
2008
2007
Percentage Change
Sales
$1,250,000
$1,000,000
Cost of goods sold
750,000
600,000
Gross margin
500,000
400,000
Operating expenses
300,000
200,000
Income before taxes
Income taxes
61,000
53,000
Net income
$ 139,000
$ 147,000
Required
a. Compute the percentage changes in Hammond Corporation's income statement components between the two years.
b. Comment on apparent trends disclosed by the percentage changes computed in Requirement a.
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