subject: Average Annual Increase [print this page] Introduction to average annual increase Introduction to average annual increase
Increase is the nature of human in life and we always appreciate the increase in the growth of our output. When a company shows their annual or quarterly results, they had to take some base year or base quarter. Let us imagine a company is showing its annual financial report, and in that, report they showed are with respect to the previous year as an example we can take the sales (increase or decrease) is relatively shown, with respect to the last year. If it is more than that of the last year, then it is increase in the revenue of the company. Mostly we daily read news of different companies about their growth or increase in the profit.
Example for Average Annual Increase
If there is an average annual increase of 28.56% and the present sale is $ 1233 million. Then the last years sale can be easily calculated by the given information.
If last year sale id $ X, then
X + 28.56% of X = 1233
X + 2X/7 = 1233
9X/7 = 1233
So, X = 1233 7/9 = $959 millions.
Question Based on Average Annual Increase
Question 1: A FMCG company produces 5 type of different products A, B, C, D and E. The yearly sale of product A in year 2008-09 was $ 230 million. While the sale for products B, C and D were $ 400 million, $ 125 million and $ 45 million respectively. If there is an increase of 20% in the sale of product A, and an increase of 10% in the sale of product B for the year 2009-10. However, the product C face a slightly dip of 8% in its sale for next year andproduct D has minute increase of 11.11% only in its sale for the financial year 2009-10.
(i) What is the annual percentage increase or decrease in the sale of products of FMCG Company for the financial year 2009-10?
(ii) What is the Average annual increase per product in dollars?
(iii) What is the Average annual increase percent per product ?
Solution:
Total sales of the FMCG company for the financial year 2008-09 = Sum of the sales of all the Four products = $(230 + 400 + 125 + 45) million = $ 800 million.
Now we will calculate the sales of respective products for the year 2009-10
Sale of Product A = $(230 + 20% of 230) = 230 + 46 = $ 276 million
Sale of Product B = $(400 + 10% of 400) = $(400 + 40) = $ 440 million
Sale of Product C = $(125 8% of 125) = $(125 10) = $ 115 million
Sale of Product D = $(45 + 11.11% of 45) = $(45 + 5) = $50 million
Therefore, total sale for the financial year of the company = Sum of the sale of all the products
$(276 + 440 + 115 + 50) million = $881 million
Annual increase for the financial year 2009-10 = $881 - $ 800 = $81
Annual percentage increase in the companys sale =
[(Difference in the sale) 100 (sale for the year 2008-09)
81 100 / 800 = 81/8 = 10.125%
(ii) Average annual increase in the sale of each product in dollars
= Total increase Total number of products
$ 81/4 = $ 20.25 millions
(iii) Average annual increase in percent for each product
