Recent Year Prior Year Revenue $67,390 $65,357 Operating expenses 62,138 60,684 Operating income $ 5,252 $ 4,673
a. For Target Corporation, determine the amount of change in millions and the percent of change (round to one decimal place) from the prior year to the recent year for:
1. Revenue
2. Operating expenses
3. Operating income
b. What conclusions can you draw from your analysis of the revenue and the total operating expenses?
Answer:
a.
1. Revenue:
$2,033 million increase ($67,390 – $65,357)
3.1% increase ($2,033 ÷ $65,357)
2. Operating expenses:
$1,454 million increase ($62,138 – $60,684)
2.4% increase ($1,454 ÷ $60,684)
3. Operating income:
$579 million increase ($5,252 – $4,673)
12.4% increase ($579 ÷ $4,673)
b. During the recent year, revenue increased by 3.1%, while operating expenses increased by only 2.4%. As a result, operating income increased by 12.4%, a favorable trend from the prior year.