Stetson Inc.'s sales for the 2021 were $16 million. Sales were $8 million 5 years earlier. (a) At what rate did the sales grow? (b) Supose someone calculated sales growth for Stetson in part (a) as follows: "Sales doubled in 5 years. This represents a growth of 100 % in 5 years; dividing 100% by 5 results in an estimated growth rate of 20% per year" Explain what is wrong with this calculation.

Stetson Inc.'s sales for the 2021 were $16 million. Sales were $8 million 5 years earlier. (a) At what rate did the sales grow? (b) Supose someone calculated sales growth for Stetson in part (a) as follows: "Sales doubled in 5 years. This represents a growth of 100 % in 5 years; dividing 100% by 5 results in an estimated growth rate of 20% per year" Explain what is wrong with this calculation.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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