## Analyzing and using the financial results – trend percentages

It is sometimes more informative to express all the dollar amounts as a percentage of one of the amounts in the base year rather than to look only at the dollar amount of the item in the financial statements. You can calculate trend percentages by dividing the amount for each year for an item, such as net income or net sales, by the amount of that item for the base year:

$\text { Trend percentage }=\frac{\text { Current year amount }}{\text { Base year amount }}$

To illustrate, assume that ShopaLot, a large retailer, and its subsidiaries reported the following net income for the years ended 2001 January 31, through 2010. The last column expresses these dollar amounts as a percentage of the 2001 amount. For instance, we would calculate the 125 per cent for 2002 as:

[(USD 1,609,000/USD 1,291,000)5 100]

 Dollar Amountof Net IncomePercentage of(millions) Percentage of1991 Net Income 1991 \$1,291 100% 1992 1.609 125 1993 1,995 155 1994 2,333 181 1995 2,681 208 1996 2,740 212 1997 3,056 237 1998 3,526 273 1999 4,430 343 2000 5,377 416 2001 6,295 488

Examining the trend percentages, we can see that ShopaLot's s net income has increased steadily over the 10-year period. The 2010 net income is over 4 times as much as the 2001 amount. This is the kind of performance that management and stockholders seek, but do not always get.

In the first three chapters of this text, you have learned most of the steps of the accounting process. Chapter 4 shows the final steps in the accounting cycle.

#### An accounting perspective: Uses of technology

The Internet sites of the Big-4 accounting firms are as follows:

 Ernst & Young http://www.ey.com Deloitte Touche Tohmatsu http://www.deloitte.com KPMG http://www.kpmg.com PricewaterhouseCoopers http://www.pwcglobal.com