Make a 5-year trend analysis for each company, using 2012 as the base year, of:Net sales, Net income and discuss the significance of the trend results.

Trend analysis | Business & Finance homework help

In 2012, Company A had net sales of $10 million and a net income of $1.5 million. In 2013, Company A saw an increase in both their net sales and net income as they reached 12 million in sales and 1.8 million in profits. This trend continued into 2014 where their sales hit 14 million with a net income of 2.2 million; 15 million in sales and 2.6 million in profits the following year; then finally 16million in 2016 with 3.3million in profits which was the highest level seen since 2012.

Company B on the other hand had a more volatile trend over this 5-year period starting off with 10million in net sales however only 800k in profits back at 2012 compared to Company A’s 1.5m. Then 2013 saw them dip slightly to 9mil/700k before rebounding to 11mil/900k respectively by 2014; 2015 saw another significant jump up to 13mil/1mil but then again fell back down to 12mil/800k for 2016, still lower than what it started at 4 years ago.

The significance of these trends can be best summed up by looking at how well each company has been able to grow its respective bottom-line during this period; for example although Company B’s top line (net sales) grew more aggressively than that of Company A’s (25% vs 20%) overall their profitability dropped from 800K down even lower to 700K by 2016 despite having higher revenues indicating poor cost management practices on their part or weak pricing power when selling their goods and services leading us conclude that while growing your revenue is very important it does not necessarily guarantee success without proper fiscal discipline throughout all departments within the organization .