Question

American Corporation has the following financial information.



Year 1 Year 2
Cash $ 202.95 $ 245.90
A/R 398.02 485.34
Inventory 785.12 648.54


If Year 1 is the base year, what is the percentage increase/decrease of each current asset amount?

Answer 1

To calculate the percentage increase or decrease of each current asset from Year 1 to Year 2, we can use the formula:

\[
\text{Percentage Change} = \left( \frac{\text{Year 2 Value} - \text{Year 1 Value}}{\text{Year 1 Value}} \right) \times 100
\]

Let's calculate it for each asset:

### Cash
- Year 1: $202.95
- Year 2: $245.90

\[
\text{Percentage Change} = \left( \frac{245.90 - 202.95}{202.95} \right) \times 100 = \left( \frac{42.95}{202.95} \right) \times 100 \approx 21.14\%
\]

### Accounts Receivable (A/R)
- Year 1: $398.02
- Year 2: $485.34

\[
\text{Percentage Change} = \left( \frac{485.34 - 398.02}{398.02} \right) \times 100 = \left( \frac{87.32}{398.02} \right) \times 100 \approx 21.93\%
\]

### Inventory
- Year 1: $785.12
- Year 2: $648.54

\[
\text{Percentage Change} = \left( \frac{648.54 - 785.12}{785.12} \right) \times 100 = \left( \frac{-136.58}{785.12} \right) \times 100 \approx -17.39\%
\]

### Summary of Percentage Changes:
- Cash: **+21.14%**
- Accounts Receivable: **+21.93%**
- Inventory: **-17.39%**