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Q14E

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Horngren'S Financial And Managerial Accounting
Found in: Page 840

Short Answer

Grand Oaks Realty’s net revenue & net income for the following five-year period using 2015 as the base year, follow:

Requirement:

  1. Compute a trend analysis for the net revenue & net income. Round to the nearest full percent.

  2. Which grew faster during the period, net revenue or the net income?

Answer

1. Given below

2. Net Income Increasing More as Compare to Revenue per year.

See the step by step solution

Step by Step Solution

Step 1: Calculation of Trend % as per revenue

2019 (a)

2018 (b)

2017 (c)

2016 (d)

2015 (e)

Net revenue

$1,360,000

$1,180,000

$1,147,000

$1,008,000

$1,044,000

Trend percent

130%

113%

110%

97%

100%

(a/e)

(b/e)

(c/e)

(d/e)

(e/e)

Step 2:Calculation of Trend % as per income

2019 (a)

2018 (b)

2017 (c)

2016 (d)

2015 (e)

Net income

127,000

120,000

87,000

75,000

83,000

Trend percent

153%

145%

105%

90%

100%

(a/e)

(b/e)

(c/e)

(d/e)

(e/e)

Step 3: Comment

Requirement 2

Net income grew faster as compared to net revenue.

Most popular questions for Business-studies Textbooks

Ross’s Lipstick Company’s long-term debt agreements make certain demands on the business. For example, Ross may not purchase treasury stock in excess of the balance of retained earnings. Also, long-term debt may not exceed stockholders’ equity, and the current ratio may not fall below 1.50. If Ross fails to meet any of these requirements, the company’s lenders have the authority to take over management of the company.Changes in consumer demand have made it hard for Ross to attract customers.

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Requirements

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