In: Finance
summary of the company’s total revenue and expenses at the end of five selected months is as follows.
Total Revenue | Total Expenses | ||
March 31 | $ 69,000 | $ 48,000 | |
June 30 | 129,000 | 90,000 | |
August 31 | 134,000 | 115,000 | |
September 30 | 159,000 | 130,000 | |
December 31 | 249,000 | 175,000 |
Rank the company’s fiscal quarters from most profitable to least profitable.
Compute the company’s income for the month of September.
Compute the company’s net income (or loss) for the first two months of the third quarter. Provide a possible explanation why profitability for the first two months of the third quarter differs significantly from profitability achieved in the third month of the quarter (as computed in part b).
1) Rank of the company's fiscal quarters is highlighted in the table given below:
2) Revenue of September = (Total Revenue of Sept - Total Revenue of Aug) = $ 25000
Expenses of September = (Total Expenses of Sept - Total Expenses of Aug) = $ 15000
Income for the month of September = Revenue of Sept - Expenses of Sept = $10000
3) Revenue of July and August = Total Revenue of 3rd quarter - Revenue of September = $ 5000
Expenses of July and August = Total Expenses of 3rd quarter - Expenses of September = ($40000 - 15000) = $25000
Loss incurred in July and August = Expenses of July and August - Revenue of July and August = ($25000 - $5000)
Loss incurred in July and August = $20000
4) Profitability in the first two months of the third quarter is different from the last month of the third quarter because in July and August the firm's expenses were greater than its revenue. On the other hand, in the month of September, the revenue is greater than expenses.