2021 2020 2019 2018 2017Sales $ 282,880 $ 270,800 $ 252,600 $ 234,560 $ 150,000Cost of goods sold 128,200 122,080 115,280 106,440 67,000Accounts receivable 18,100 17,300 16,400 15,200 9,000Compute trend percents for the above accounts, using 2017 as the base year. For each of the three accounts, state whether the situation as revealed by the trend percents appears to be favorable or unfavorable.
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Parrain 5 months ago
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Based on the net sales, the cost of goods sold, and the accounts receivable over the years, the net sales are favorable while the others are unfavorable.

What is trend for net sales sold?

2017 is to be used as the base year which means that all denominators will be the 2017 net sales figure of $150,000.

2017:                                2018:                                   2019:
= 150,000 / 150,000       = 234,560 / 150,000         = 252,600 / 150,000

= 100%                             = 156.37%                           = 168.40%

2020:                                2021:                                  
= 270,800 / 150,000       = 282,880 / 150,000

= 180.53%                         = 188.59%

This trend is favorable as it shows net sales are rising.

What is the trend for cost of goods sold?

2017:                                2018:                                   2019:
= 67,000 / 67,000        = 106,440 / 67,000            = 115,280 / 67,000

= 100%                             = 158.87%                           = 172.06%

2020:                                2021:                                
= 122,080 /67,000          = 128,200 / 67,000

= 182.21%                         = 191.34%

Cost of goods are an expense so this is Unfavorable.

What is the trend for accounts receivable?

2017:                                2018:                                   2019:
= 9,000 / 9,000              = 15,200/ 9,000                = 16,400 / 9,000

= 100%                             = 168.87%                           = 182.22%

2020:                                2021:                                
= 17,300 / 9,000             = 18,100 / 9,000

= 192.22%                         = 201.11%

The business needs cash so when more is tied up as Accounts Receivables this is Unfavorable.

Find out more on trend analysis at https://brainacademy.pro/question/11917571.

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