Trend Analysis for Gateway, Inc.
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3. The following historical data were derived from Gateway, Inc.'s consolidated financial statements. (It should be noted that past data are not necessarily indicative of the results of future operations.)
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The following historical data were derived from Gateway, Inc.'s consolidated financial statements. (It should be noted that past data are not necessarily indicative of the results of future operations.).
1995 1996 1997 1998 1999
Net Sales 3,676,328 5,035,228 6,293,680 7,467,925 8,645,561
Net Income 172,981 250,679 109,797 346,399 427,944
Total Assets 1,124,011 1,673,411 2,039,271 2,890,380 3,954,688
Long Term Obligations net of current maturties 10,805 7,244 7,240 3,360 2,998
a) Are the trends expressed in the above data generally consistent with each other?
b) In your opinion, which of the above trends would be most meaningful to a potential investor in common stock of Gateway, Inc.? Which trend would be least meaningful?
c) What other data (trend or otherwise) would you like to have access to prior to making an investment in Gateway, Inc.?
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Solution Summary
The solution performs trend analysis on a set of financial data and details what other information might be helpful in the decision process of whether or not to invest in the firm presented.
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a). Some of the items are trending consistently while others are not. Graphically, net sales and total assets are increasing at a consistent rate. Long term debt is decreasing at a similar rate indicative of the firm's use of other financing options relative to the new assets. However, net income isn't necessarily increasing in a manner similar manner to net sales. Perhaps of greatest value to the potential investor is looking at the net ...
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