Question

2016 601.3 (292.0) 309.3 (121.3) (77.0) (40.4) 70.6 (40.9) 29.7 (10.4) 19.3 56.2 $0.34 2016 21.6 2012--2016 Financial Statement Data and Stock Price Data for Mydeco Corp. (All data as of fiscal year end; in $ millions) Income Statement 2012 2013 2014 2015 Revenue 406.8 364.2 428.5 512.4 Cost of Goods Sold (192.7) (177.1) (203.3) (249.4) Gross Profit 214.1 187.1 225.2 263.0 Sales and Marketing (68.3) (66.0) (82.1) (98.0) Administration (60.4) (57.3) (60.5) (65.1) Depreciation & Amortization (29.2) (28.0) (35.8) (39.6) EBIT 56.2 35.8 46.8 60.3 Interest Income (Expense) (34.6) (31.9) (32.8) (39.0) Pretax Income 3.9 14.0 21.3 Income Tax (7.6) (1.4) (4.9) (7.5) Net Income 14.0 2.5 9.1 13.8 Shares Outstanding (millions) 56.2 56.2 56.2 56.2 Earnings per Share $0.25 $0.04 $0.16 $0.25 Balance Sheet 2012 2013 2014 2015 Assets Cash 47.4 70.3 90.4 82.7 Accounts Receivable 89.9 67.9 71.1 76.8 Inventory 34.8 31.4 27.3 32.6 Total Current Assets 172.1 169.6 188.8 192.1 Net Property, Plant & Equipment 240.5 246.8 313.5 346.8 Goodwill & Intangibles 362.7 362.7 362.7 362.7 Total Assets 775.3 779.1 865.0 901.6 Liabilities & Stockholders' Equity Accounts Payable 19.9 18.5 20.2 25.7 Accrued Compensation 6.7 6.8 6.1 8.2 Total Current Liabilities 26.6 25.3 33.9 Long-Term Debt 502.6 502.6 579.0 604.2 Total Liabilities 529.2 527.9 605.3 638.1 Stockholders' Equity 246.1 251.2 259.7 263.5 Total Liabilities & Stockholders' 775.3 779.1 865.0 901.6 Equity 90.3 86.3 36.1 212.7 345.4 362.7 920.8 26.3 32.4 9.5 41.9 604.2 646.1 274.7 920.8

Requirements:

a. By what percentage did​ Mydeco's revenues grow each year from 2013 to 2016​?

b. By what percentage did net income grow each​ year?

c. Why might the growth rates of revenues and net income​ differ?

Answer 1

a]

% growth in each year = (current year revenue - previous year revenue) / previous year revenue

b]

% growth in each year = (current year net income - previous year net income) / previous year net income

1 в 2012 406.8 14.0 2 Revenue 3 net income 4 % change - revenue 5 % change - net income с 2013 364. 2 2. 5 -10.47% -82.14% D 2014 4 28.5 9 .1 17.66% 264.00% E 2015 512.4 13.8 19.58% 51.65% F 2016 601.3 19.3 17.35% 39.86%

B 2012 406.8 2 Revenue 3 net income 4 % change - revenue 5 % change - net income 14 2013 364.2 2.5 =(C2-B2)/B2 =(C3-B3)/B3 DE 2014 2015 2016 428.5 512.4 601.3 9.1 13.8 19.3 =(D2-C2)/C2 =(E2-D2)/D2 = (F2-E2)/E2 =(D3-C3)/c3 = (E3-D3)/D3 =(F3-E3)/E3

c]

The growth growth rates of revenues and net income​ might differ because :

• The growth rates of cost of sales may be different from growth rates of revenues
• The growth rates of expenses may be different from growth rates of revenues
• The growth rates of depreciation and amortization expenses may be different from growth rates of revenues due to different levels of capital expenditure
• The growth rates of interest expenses may be different from growth rates of revenues due to change in capital structure