a.
To compute: Ratio of each year’s data with previous year’s data.
Introduction: All ratios shall be calculated by formula:
Ratio measures the change in data from a base value of 1.
b.
To compute: Growth of figures relative to last year.
Introduction: Since ratios are measuring change in base value of 1 from one year to next, growth rate can be calculated by subtracting 1 and multiplying the result by 100 to get growth in percentage terms.
c.
To compute: Arithmetic mean of growth for each item.
Introduction: Average function in excel will calculate the arithmetic mean of growth over the given period by dividing the sum of growth percentage by number of observations, that is, 4.
d.
To compute: Geometric mean of growth for each item.
Introduction: Geometric mean considers the impact of compounding, that is, change in base value due to impact of previous year’s growth.
e.
To state: Difference between arithmetic mean and geometric mean and possibility of geometric mean being greater than arithmetic mean.
Introduction: Arithmetic mean is derived by dividing the sum of observations by number of observations, on the other hand geometric mean is derived as the product of observations rooted by number of observations.
f.
To Compare:Results for geometric average and arithmetic average for given variables.
Introduction: Arithmetic mean is derived by dividing the sum of observations by number of observations, on the other hand geometric mean is derived as the product of observations rooted by number of observations.
Want to see the full answer?
Check out a sample textbook solutionChapter 1 Solutions
EBK FINANCIAL ANALYSIS WITH MICROSOFT E
- Using the Value Line Investment Survey report in Exhibit 11.5, find the following information for Apple. What was the amount of revenues (i.e., sales) generated by the company in 2017? What were the latest annual dividends per share and dividend yield? What is the earnings per share (EPS) projection for 2019? How many shares of common stock were outstanding? What were the book value per share and EPS in 2017? How much long-term debt did the company have in the third quarter of 2018?arrow_forwardAssume the following sales data for a company: Current year $1,025,000 Preceding year 820,000 What is the percentage increase in sales from the preceding year to the current year?arrow_forwardSammy Corporation reported net sales of P300,000, P330,000, and P360,000 in the years, 2010, 2011, and 2012,respectively. If 2010 is the base year, what is the trend percentage for 2012?arrow_forward
- A firm has reported the following revenues. Forecast the firm's year 4 revenue using the average annual growth rate. Year 1: $17,864. Year 2: $17,149. Year 3:$19,359. Year 4: ?arrow_forwardA company’s sales in the prior year were $300,000 and in the current year were $351,000. Using the prior year as the base year, the sales trend percent for the current year is:arrow_forwardComputing trend analysis Grand Oaks Realty’s net revenue and net income for the following five—year period, using 2015 as the base year, follow: Requirements Compute a trend analysis for net revenue and net income. Round to the nearest full percent. Which grew faster during the period, net revenue or net income?arrow_forward
- Compute trend percentages for the following items taken from the financial statements of Lopez Plumbing over a five-year period. Treat 2014 as the base year. State whether the trends are favorable or unfavorable. (Dollar amounts are stated in thousands.) 2018 2017 2016 2015 2014 Sales $81,400 $74,000 $61,500 $59,000 $50,000 Cost of Goods Sold 58,500 48,000 40,500 37,000 30,000arrow_forwardThe following information is available to you for the Wooden Company: 2011 2010 Net Income. 53,394 39,510 Net Sales 233,715 182,795 From the information provided, calculate Wooden’s profit margin ratio for each year. Be sure to show your calculations. 2011 2010 Comment on the results, assuming that the industry average for the profit margin ratio is 25% for each of the two years.arrow_forwardCompute trend percentages forRolling Hills Realtors' net revenue and net income for the following five-year period, using 2016 as the base year. Which grew faster during the period, net revenue or net income? Enter trend percentage values for net revenue and net income in the table below. (Enter the results as a percentage.) 2020 2019 2018 2017 2016 Net revenue. . . . . . % % % % % Net income. . . . . . . % % % % % Data table (in thousands) 2020 2019 2018 2017 2016 Net revenue. . . . . . $1,271 $1,148 $1,066 $943 $1,025 Net income. . . . . . . $180 $168 $126 $96 $120arrow_forward
- Sikele Trading company had 122 stores in 2010 and at the end of 2017 had 41 stores. What was the growth rate in stores over the period?arrow_forwardLoomis, Inc. reported the following on the company’s income statement in two recent years: Please see the image for details: a. Determine the times interest earned ratio for the current year and the prior year. Round to one decimal place.b. Is this ratio improving or declining?arrow_forwardJames Furnishings generated $2 million in sales during 2016, and its year-end total assets were $1.5 million. Also, at year-end 2016, current liabilities were $500,000, consisting of $200,000 of notes payable, $200,000 of accounts payable, and $100,000 of accrued liabilities. Looking ahead to 2017, the company estimates that its assets must increase by $0.75 for every $1.00 increase in sales. James' profit margin is 3%, and its retention ratio is 35%. How large of a sales increase can the company achieve without having to raise funds externally? Write out your answer completely. For example, 25 million should be entered as 25,000,000. Do not round intermediate calculations. Round your answer to the nearest cent.arrow_forward
- Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
- EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENTPfin (with Mindtap, 1 Term Printed Access Card) (...FinanceISBN:9780357033609Author:Randall Billingsley, Lawrence J. Gitman, Michael D. JoehnkPublisher:Cengage LearningFinancial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning