Question

By what percentage did​ mydeco's revenues grow each year from 2010 to​ 2013?b. by what percentage did net income grow each​ year?c. why might the growth rates of revenues and net income​ differ?

Answer 1

Answer:

A) I can calculate by what percentage mydeco's revenues grew from 2012 to 2016.

total revenue 2012 = $402.5 million

total revenue 2016 = $606.4 million

change in revenue = ($606.4 - $402.5) / $402.5 = $203.9 / $402.5 = 50.66%

B) net income grew by:

net income 2012 = $18.1 million

net income 2016 = $27.4 million

change in net income = ($27.4 - $18.1) / $18.1 = $9.3 / $18.1 = 51.38%

C) For the years 2012 and 2016 the net income was very similar to total revenue, but that didn't happen during 2014 and 2015 since revenues increased, but net income decreased. The problem that mydeco faced during those years was that their costs, both COGS and sales and marketing costs increased by a much larger proportion than revenue. This is specially true for sales and marketing costs that increased almost 50% (between 2012 -2015) while revenues increased only 25%. Probably the company had to invest a lot of resources to rebound their sales since they plummeted in 2013.