201920182017Revenue2,000,0001,500,0001,000,000Using horizontal analysis on the above table, we can determine thatSelect one:a. None of the choicesb. The percentage increase in revenue from 2018 to 2019 is the same as the percentage increase in revenue from 2017 to 2018.c. Revenue is increasing every year and the rate of increase from 2018 to 2019 is higher than the rate of increase from 2017 to 2018.d. Even though revenue is increasing every year, the rate of increase from 2018 to 2019 is less than the rate of increase from 2017 to 2018.
Question
201920182017Revenue2,000,0001,500,0001,000,000Using horizontal analysis on the above table, we can determine thatSelect one:a. None of the choicesb. The percentage increase in revenue from 2018 to 2019 is the same as the percentage increase in revenue from 2017 to 2018.c. Revenue is increasing every year and the rate of increase from 2018 to 2019 is higher than the rate of increase from 2017 to 2018.d. Even though revenue is increasing every year, the rate of increase from 2018 to 2019 is less than the rate of increase from 2017 to 2018.
Solution
c. Revenue is increasing every year and the rate of increase from 2018 to 2019 is higher than the rate of increase from 2017 to 2018.
Here's the step by step calculation:
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Calculate the percentage increase from 2017 to 2018: (1,500,000 - 1,000,000) / 1,000,000 * 100 = 50%
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Calculate the percentage increase from 2018 to 2019: (2,000,000 - 1,500,000) / 1,500,000 * 100 = 33.33%
So, while revenue is increasing each year, the rate of increase from 2018 to 2019 (33.33%) is less than the rate of increase from 2017 to 2018 (50%). Therefore, the correct answer is d. Even though revenue is increasing every year, the rate of increase from 2018 to 2019 is less than the rate of increase from 2017 to 2018.
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