Holiday Greeting Cards is a local company organized late in July of 2020. The companys net income
Question:
Holiday Greeting Cards is a local company organized late in July of 2020. The company’s net income for each of its first six calendar quarters of operations is summarized as follows. (Amounts are stated in thousands of dollars.)
Hal Holcomb reports the business and economic news for a local radio station. On the day that Holiday Greeting Cards released the given financial information, you heard Holcomb make the following statement during his broadcast: “Holiday Greeting Cards enjoyed a 350 percent increase in its profits for the fourth quarter, and profits for the entire year were up by over 100 percent.”
Instructions.
a. Show the computations that Holcomb probably made in arriving at his statistics. (Hint: Holcomb did not make his computations in the manner recommended in this chapter. His figures, however, can be developed from the financial information provided above.)
b. Do you believe that Holcomb’s percentage changes present a realistic impression of Holiday Greeting Cards’s rate of growth in 2021? Explain.
c. What figure would you use to express the percentage change in Holiday’s fourth-quarter profits in 2021? Explain why you would compute the change in this manner.
Step by Step Answer:
a Holcomb computed the 350 increase in fourthquarter profits by comparing the fourthquarter profits ...View the full answer
Financial And Managerial Accounting The Basis For Business Decisions
ISBN: 9781260247930
19th Edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello
