Question

Selected comparative financial statements of Haroun Company follow.

HAROUN COMPANY
Comparative Income Statements
For Years Ended December 31, 2019–2013
($ thousands)	2019			2018			2017			2016			2015			2014			2013
Sales	$	2,778		$	2,433		$	2,214		$	2,029		$	1,893		$	1,760		$	1,443
Cost of goods sold		1,997			1,625			1,398			1,223			1,137			1,063			847
Gross profit		781			808			816			806			756			697			596
Operating expenses		595			465			427			315			273			269			224
Net income	$	186		$	343		$	389		$	491		$	483		$	428		$	372

HAROUN COMPANY
Comparative Balance Sheets
December 31, 2019–2013
($ thousands)	2019			2018			2017			2016			2015			2014			2013
Assets
Cash	$	160		$	211		$	219		$	224		$	232		$	229		$	237
Accounts receivable, net		1,146			1,204			1,090			836			736			697			492
Merchandise inventory		4,147			3,019			2,638			2,223			1,997			1,696			1,230
Other current assets		106			96			59			106			89			91			47
Long-term investments		0			0			0			327			327			327			327
Plant assets, net		5,075			5,055			4,422			2,493			2,579			2,292			1,967
Total assets	$	10,634		$	9,585		$	8,428		$	6,209		$	5,960		$	5,332		$	4,300
Liabilities and Equity
Current liabilities	$	2,673		$	2,247		$	1,475		$	1,227		$	1,064		$	1,007		$	649
Long-term liabilities		2,857			2,488			2,421			1,124			1,149			1,244			933
Common stock		1,935			1,935			1,935			1,720			1,720			1,505			1,505
Other paid-in capital		484			484			484			430			430			376			376
Retained earnings		2,685			2,431			2,113			1,708			1,597			1,200			837
Total liabilities and equity	$	10,634		$	9,585		$	8,428		$	6,209		$	5,960		$	5,332		$	4,300

Required:
1. Complete the below table to calculate the trend percents for all components of both statements using 2013 as the base year.
2. Refer to the results from part 1. (a) Did sales grow steadily over this period? (b) Did net income as a percent of sales grow over the past four years? (c) Did inventory increase over this period?

Refer to the results from part 1. (a) Did sales grow steadily over this period? (b) Did net income as a percent of sales grow over the past four years? (c) Did inventory increase over this period?

	(a) Did sales grow steadily over this period? (b) Did net income as a percent of sales grow over the past four years? (c) Did inventory increase over this period?

Answer 1

Correct Answer:

HAROUN COMPANY
Income Statement Trends
For the year ended December 31, 2013-2019
	2019	2018	2017	2016	2015	2014	2013
Sales	192.5%	168.6%	153.4%	140.6%	131.2%	122.0%	100.0%
Cost of Goods Sold	235.8%	191.9%	165.1%	144.4%	134.2%	125.5%	100.0%
Gross Profit	131.0%	135.6%	136.9%	135.2%	126.8%	116.9%	100.0%
Operating Expenses	265.6%	207.6%	190.6%	140.6%	121.9%	120.1%	100.0%
Net Income	50.0%	92.2%	104.6%	132.0%	129.8%	115.1%	100.0%

HAROUN COMPANY
Comparative Balance Sheet Trends
December 31, 2013-2019
	2019	2018	2017	2016	2015	2014	2013
Assets
Cash	67.5%	89.0%	92.4%	94.5%	97.9%	96.6%	100.0%
Accounts Receivables, Net	232.9%	244.7%	221.5%	169.9%	149.6%	141.7%	100.0%
Merchandise Inventory	337.2%	245.4%	214.5%	180.7%	162.4%	137.9%	100.0%
Other Current Assets	225.5%	204.3%	125.5%	225.5%	189.4%	193.6%	100.0%
Long term Investments	0.0%	0.0%	0.0%	100.0%	100.0%	100.0%	100.0%
Plant assets, net	258.0%	257.0%	224.8%	126.7%	131.1%	116.5%	100.0%
Total Assets	247.3%	222.9%	196.0%	144.4%	138.6%	124.0%	100.0%
Liabilities and Equity
Current Liabilities	286.5%	240.8%	259.5%	120.5%	123.2%	133.3%	100.0%
Long-Term Liabilities	189.8%	165.3%	128.6%	114.3%	114.3%	100.0%	100.0%
Common Stock	514.6%	514.6%	128.7%	114.4%	114.4%	100.0%	100.0%
Other Paid-in Capital	57.8%	57.8%	252.4%	204.1%	190.8%	143.4%	100.0%
Retained Earnings	320.8%	290.4%	252.4%	204.1%	190.8%	143.4%	100.0%
Total Liabilities and equity	247.3%	222.9%	196.0%	144.4%	138.6%	124.0%	100.0%

A	YES, sales grew steadily over the period
B	No, the net income did not grow over past 4 years
C	Yes, inventory increased over the period of time

End of answer.

Thanks.