Calculation note1

Calculation note1 - only 57.5 The trends look different if...

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Calculation notes: 1. The base year trend percentage is always 100.0%. A trend percentage of  less than 100.0% means the balance has decreased below the base year level  in that particular year. A trend percentage greater than 100.0% means the  balance in that year has increased over the base year. A negative trend  percentage represents a negative number. 2. If the base year is zero or negative, the trend percentage calculated will  not be meaningful. In this example, the sales have increased 59.3% over the five-year period while the cost  of goods sold has increased only 55.9% and the operating expenses have increased 
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Unformatted text preview: only 57.5%. The trends look different if evaluated after four years. At the end of 20X0, the sales had increased almost 20%, but the cost of goods sold had increased 31%, and the operating expenses had increased almost 41%. These 20X0 trend percentages reflect an unfavorable impact on net income because costs increased at a faster rate than sales. The trend percentages for net income appear to be higher because the base year amount is much smaller than the other balances....
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