Question #18
Reading: Reading 14 Financial Statement Modeling
PDF File: Reading 14 Financial Statement Modeling.pdf
Page: 11
Status: Unattempted
Question
Victor Mendoza is an equity analyst for LLT Partners, a private wealth management firm. Mendoza is currently valuing Testo Inc, a seller of smart phones. While reviewing the financials, Mendoza collects sales information of two of Testo's popular models as indicated below (figures in $ millions): Year 20x1 20X2 20X3 Alpinex 88.9 92.3 97.5 Bemax 0 54 433 What percentage of combined growth in 20X3 is due to Bemax?
Answer Choices:
A. 79%
B. 99%
C. 54%
Explanation
Combined sales for 20X2 = 92.3 + 54 = 146.3
Combined sales for 20X3 = 97.5 + 433 = 530.5
Increase in sales for both products in 20X3 = 530.5 – 146.3 = $384.20
Increase in sales for Bemax = 433 – 54 = $ 379
Percentage of combined growth attributable to Bemax = 379/384.20 = 98.65%