Question

                  

See Table showing financial statement data and stock price data for Mydeco Corp.

a. By what percentage did​ Mydeco's revenues grow each year from

2013 to 2016​?

b. By what percentage did net income grow each​ year?

c. Why might the growth rates of revenues and net income​ differ?

   
                      
Income Statement   2012   2013   2014   2015   2016  
Revenue   400.6   368.6   422.1   515.4   600.9  
Cost of Goods Sold   (185.2)   (173.5)   (204.2)   (246.4)   (289.8)  
Gross Profit   215.4   195.1   217.9   269.0   311.1  
Sales and Marketing   (66.4)   (67.0)   (83.4)   (104.9)   (115.8)  
Administration   (60.7)   (60.8)   (58.8)   (64.5)   (77.2)  
Depreciation & Amortization   (26.2)   (25.1)   (33.9)   (37.7)   (36.9)  
EBIT   62.1   42.2   41.8   61.9   81.2  
Interest Income (Expense)   (32.8)   (31.9)   (32.8)   (36.8)   (38.6)  
Pretax Income   29.3   10.3   9.0   25.1   42.6  
Income Tax   (10.3)   (3.6)   (3.2)   (8.8)   (14.9)  
Net Income   19.0   6.7   5.8   16.3   27.7  
Shares Outstanding (millions)   56.5   56.5   56.5   56.5   56.5  
Earnings per Share   $0.34   $0.12   $0.10   $0.29   $0.49  
Balance Sheet   2012   2013   2014   2015   2016  
Assets                      
Cash   48.9   71.4   94.3   86.7   103.2  
Accounts Receivable   88.1   68.2   68.9   77.2   85.2  
Inventory   32.9   30.3   28.1   31.1   33.5  
Total Current Assets   169.9   169.9   191.3   195.0   221.9  
Net Property, Plant & Equip.   248.9   242.7   306.5   343.6   342.2  
Goodwill & Intangibles   365.1   365.1   365.1   365.1   365.1  
Total Assets   783.9   777.7   862.9   903.7   929.2  
Liabilities & Stockholders' Equity                      
Accounts Payable   18.9   16.1   23.9   25.8   32.8  
Accrued Compensation   6.9   6.8   7.9   8.9   10.2  
Total Current Liabilities   25.8   22.9   31.8   34.7   43.0  
Long-term Debt   495.1   495.1   568.7   595.0   595.0  
Total Liabilities   520.9   518.0   600.5   629.7   638.0  
Stockholders' Equity   263.0   259.7   262.4   274.0   291.2  
Total Liabilities & Stockholders' Equity   783.9   777.7   862.9   903.7   929.2  
Statement of Cash Flows   2012   2013   2014   2015   2016  
Net Income   19.0   6.7   5.8   16.3   27.7  
Depreciation & Amortization   26.2   25.1   33.9   37.7   36.9  
Chg. in Accounts Receivable   3.9   19.9   -0.7   (8.3)   (8.0)  
Chg. in Inventory   (2.9)   2.6   2.2   (3.0)   (2.4)  
Chg. in Pay. & Accrued Comp.   2.1   (2.9)   8.9   2.9   8.3  
Cash from Operations   48.3   51.4   50.1   45.6   62.5  
Capital Expenditures   (23.7)   (23.7)   (95.6)   (74.3)   (39.5)  
Cash from Investing Activ.   (23.7)   (23.7)   (95.6)   (74.3)   (39.5)  
Dividends Paid   (5.2)   (5.2)   (5.2)   (5.2)   (6.5)  
Sale (or purchase) of stock   -   -   -   -   -  
Debt Issuance (Pay Down)   -   -   73.6   26.3   -  
Cash from Financing Activ.   (5.2)   (5.2)   68.4   21.1   (6.5)  
Change in Cash   19.4   22.5   22.9   (7.6)   16.5  
Mydeco Stock Price   $8.17   $3.35   $5.09   $9.43   $12.11   

Answer 1

a.

Year	2012	2013	2014	2015	2016
Revenue	400.6	368.6	422.1	515.4	600.9
Revenue Growth		-7.99%	14.51%	22.10%	16.59%

b.

Year	2012	2013	2014	2015	2016
Net Income	19	6.70	5.80	16.30	27.70
Net Income Growth		-64.74%	-13.43%	181.03%	69.94%

c. The growth rates of revenues and net incomes may differ because the cost of goods sold & other expenses move at different rates than revenues. For example, revenues declined by 7.99% in 2013 but the cost of goods sold only declined by 6.32%.