
Trend percents:
A horizontal form of analysis which reveals a pattern in data across successive period is known as trend percents. In this analysis items are expressed as a percentage of a base year and items are taken line by line.
Common size percents:
Common size percent is the percent of each account expressed as a percentage of the sales value.
1.
To compute: Year 2013, 2014 and 2015 trend percents for net sales, cost of sales, operating income, other income(expense)net, provision for income taxes and net income of A Company by using 2013 as base year.

Explanation of Solution
To compute trend percents, base amount is required firstly. Base amount is an amount which is predecided.
Formula to calculate trend percent is:
Trend percents are shown below:
Particulars | 2015(%) | 2014(%) | 2013(%) |
Net sales | 136.75 | 106.95 | 100 |
Cost of sales | 131.41 | 105.30 | 100 |
Operating income | 145.37 | 107.15 | 100 |
Other income (expense) net | 111.16 | 84.78 | 100 |
Provision for income taxes | 145.76 | 106.52 | 100 |
Net income | 144.16 | 106.68 | 100 |
Working Notes:
Trend percents for Sales:
Trend percents for Cost of sales:
Trend percents for operating income:
Trend percents for other income (expense) net:
Trend percents for provision for income tax:
Trend percents for net income:
Thus, Except other income (expenses). All other items show increased percents in every year.
2.
To compute: Common size percent of (a) total current assets (b) property, plant and equipment, net and (c)
2.

Explanation of Solution
Formula to calculate common size percent is:
Common size percents are shown below:
Particulars | 2015(%) | 2014(%) |
(a) Total current assets | 30.77 | 29.56 |
(b) Property, plant and equipment, net | 7.74 | 8.9 |
(c) Goodwill plus acquired intangible assets, net | 3.10 | 3.78 |
Working notes:
(a) Common size percents of total current assets:
(b) Common size percents of property, plant and equipment, net:
(c) Common size percents of goodwill plus acquired intangible assets, net:
3.
To explain: Changes across the year for the income statement trends computed in part 1 and the
3.

Explanation of Solution
- Trend percents of income statement items represent an increased trend. Such as net sales trend percent is 136.75 in the year 2015 and 106.95 in the 2014 same has been increases with 29.8 (136.75-106.95).
- Only other income is reduced in 2014, all other income statement trends show increased numbers.
- Common size percent of balance sheet items shows increase in the current assets of the company. For example total current assets of the company have been increased to 30.77% in 2015 year from 29.56% in 2014.
- Other assets marginaly reduced in 2015 as a percentage of total assets.
Thus, A Company works quite efficiently.
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Chapter 13 Solutions
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