P1.47 Using Historical Numbers to Forecast Financial Statement Items Abbott Laboratories reports the following revenue for fiscal years 2006 through 2019.

Year Revenue in $ millions Year Revenue in $ millions 2006 .... $22,476 2013 .... $21 ,848 2007 ... . 25,914 2014 ... . 20,247 2008 .... 29,528 2015 .. .. 20,405 2009 .... 30,765 2016 .... 20,853 2010 .... 35,167 2017 .... 27,390 2011 .. .. 38,851 2018 ... . 30,578 2012 ... . 39,874 2019 ... . 31 ,904 Required

a. Calculate year-over-year change in Revenue for 2005 through 2019.

b. Assume that an analyst uses the most current year's revenue growth to forecast next year's revenue.

Use that method to forecast 2012 revenue for Abbott Labs.

c. Assume that an analyst uses the average of the prior five years' revenue growth to forecast next year's revenue. Use that method to forecast 2012 revenue for Abbott Labs.

d. Compare the forecasts from part b and part

c, above. Which method provided the better forecast?

e. Consider revenue growth in 20 13. Suggest two reasons for what we observe.

f In 2016, Abbott Labs announced that it would acquire another pharmaceutical company in 201 7. How would this affect an analyst's forecast of2017 revenue?