Question

For the following problems, use this information from Thompson Corporation’s annual reports:

Column1	Revenue	Employees
Year	($million)
2003	28.5	187
2004	34.3	206
2005	48.0	276
2006	63.4	316
2007	72.5	319
2008	82.5	323
2009	53.7	278
2010	48.9	287
2011	46.5	264
2012	46.7	258
2013	46.0	244
2014	47.2	262
2015	55.8	294
2016	62.4	306
2017	68.4	319
2018	72.1	322

These data are included in the file Thompson Data Spring 2019

1. Compute a simple index for the revenue each year of Thompson. Use 2003 as the base period. (4 pts)
2. Compute a simple index for the revenue each year of Thompson using the period 2003–05 as the base. (4 pts)
3. What can you conclude about the change in revenue over this time period? (2 pts.)
4. Compute a simple index for the number of employees each year for Thompson. Use 2003 as the base period. (4 pts)
5. Compute a simple index for the number of employees each year for Thompson using the period 2003–05 as the base. (4 pts)
6. What can you conclude about the change in the number of employees over the period? (2 pts)

Answer 1

SOLUTION:

HERE I AM ANSWERING USING EXCEL SHEET AND SOME SMALL CALCULATIONS

The calculations are shown in the excel sheet

Column1	Revenue	Employees	Simple index of revenue with base 2003	Simple index of revenue with base 2003-2005	Simple index of Employees with base 2003	Simple index of Employees with base 2003-05
Year	($million)
2003	28.5	187	100.00	77.17	100.00	83.86
2004	34.3	206	120.35	92.87	110.16	92.38
2005	48	276	168.42	129.96	147.59	123.77
2006	63.4	316	222.46	171.66	168.98	141.70
2007	72.5	319	254.39	196.30	170.59	143.05
2008	82.5	323	289.47	223.38	172.73	144.84
2009	53.7	278	188.42	145.40	148.66	124.66
2010	48.9	287	171.58	132.40	153.48	128.70
2011	46.5	264	163.16	125.90	141.18	118.39
2012	46.7	258	163.86	126.44	137.97	115.70
2013	46	244	161.40	124.55	130.48	109.42
2014	47.2	262	165.61	127.80	140.11	117.49
2015	55.8	294	195.79	151.08	157.22	131.84
2016	62.4	306	218.95	168.95	163.64	137.22

Formula in Excel

Column1	Revenue	Employees	Simple index of revenue with base 2003	Simple index of revenue with base 2003-2005	Simple index of Employees with base 2003	Simple index of Employees with base 2003-05
Year	($million)
2003	28.5	187	=B4/B$4*100	=B4/AVERAGE($B$4:$B$6)*100	=C4/C$4*100	=C4/AVERAGE(C$4:C$6)*100
2004	34.3	206	=B5/B$4*100	=B5/AVERAGE($B$4:$B$6)*100	=C5/C$4*100	=C5/AVERAGE(C$4:C$6)*100
2005	48	276	=B6/B$4*100	=B6/AVERAGE($B$4:$B$6)*100	=C6/C$4*100	=C6/AVERAGE(C$4:C$6)*100
2006	63.4	316	=B7/B$4*100	=B7/AVERAGE($B$4:$B$6)*100	=C7/C$4*100	=C7/AVERAGE(C$4:C$6)*100
2007	72.5	319	=B8/B$4*100	=B8/AVERAGE($B$4:$B$6)*100	=C8/C$4*100	=C8/AVERAGE(C$4:C$6)*100
2008	82.5	323	=B9/B$4*100	=B9/AVERAGE($B$4:$B$6)*100	=C9/C$4*100	=C9/AVERAGE(C$4:C$6)*100
2009	53.7	278	=B10/B$4*100	=B10/AVERAGE($B$4:$B$6)*100	=C10/C$4*100	=C10/AVERAGE(C$4:C$6)*100
2010	48.9	287	=B11/B$4*100	=B11/AVERAGE($B$4:$B$6)*100	=C11/C$4*100	=C11/AVERAGE(C$4:C$6)*100
2011	46.5	264	=B12/B$4*100	=B12/AVERAGE($B$4:$B$6)*100	=C12/C$4*100	=C12/AVERAGE(C$4:C$6)*100
2012	46.7	258	=B13/B$4*100	=B13/AVERAGE($B$4:$B$6)*100	=C13/C$4*100	=C13/AVERAGE(C$4:C$6)*100
2013	46	244	=B14/B$4*100	=B14/AVERAGE($B$4:$B$6)*100	=C14/C$4*100	=C14/AVERAGE(C$4:C$6)*100
2014	47.2	262	=B15/B$4*100	=B15/AVERAGE($B$4:$B$6)*100	=C15/C$4*100	=C15/AVERAGE(C$4:C$6)*100
2015	55.8	294	=B16/B$4*100	=B16/AVERAGE($B$4:$B$6)*100	=C16/C$4*100	=C16/AVERAGE(C$4:C$6)*100
2016	62.4	306	=B17/B$4*100	=B17/AVERAGE($B$4:$B$6)*100	=C17/C$4*100	=C17/AVERAGE(C$4:C$6)*100

1.The revenue index for 2003 was 100 and in 2016 it is 218.95 so change in revenue index = 218.95-100= 118.95

That means there is a 118.95 % increase in yearly revenues from 2003 to 2016

Average percentage increase per year = 8.46%

2. When we take our base year 2003-05 we calculate the mean revenue of the three years and this would be used to calculate the simple index.You can note that when we take the index no average of these 3 years i.e. average(77.17,92.87,129.96) it will come as 100.In this case, as we can see from the calculation the change in revenue percentage would be 168.95-100 = 68.95%

so, in this case, the percentage increase in revenue decreases drastically

3.The percentage increase in the number of employees =163.64-100= 63.64%

4.The percentage increase in the number of employees =137.22-100= 37.22% over the year

Thank you!