Needle Company reports accounts receivable of $100,000 in 2023 and $250,000 in 2024. Using horizontal analysis, what would be the percentage increase or decrease in accounts receivable?Multiple Choice60% decrease150% decrease150% increase60% increase
Question
Needle Company reports accounts receivable of 250,000 in 2024. Using horizontal analysis, what would be the percentage increase or decrease in accounts receivable?Multiple Choice60% decrease150% decrease150% increase60% increase
Solution
To calculate the percentage increase in accounts receivable from 2023 to 2024, you would use the formula:
[(Value in 2024 - Value in 2023) / Value in 2023] * 100%
Substituting the given values:
[(250,000 - 100,000) / 100,000] * 100% = 150%
So, the accounts receivable increased by 150% from 2023 to 2024. Therefore, the correct answer is 150% increase.
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