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CMA Intermediate · Financial Management and Business Data Analytics · Comparative, Common-Size Financial Statements and Trend Analysis

A comparative income statement of Sahyadri Foods shows net profit of ₹40,000 in Year 1 and ₹30,000 in Year 2 for a share capital base unchanged. Year 3 net profit is ₹45,000. What is the percentage change in net profit in Year 3 over Year 2?

Net profit increased by 50 per cent. In a year-to-year comparative statement the immediately preceding year, Year 2 profit of ₹30,000, is the base, so the ₹15,000 rise is divided by 30,000.

  1. A12.5% increase
  2. B50% increaseCorrect
  3. C37.5% increase
  4. D33.33% increase

Explanation

Change = 45,000 − 30,000 = 15,000. Base is the immediately preceding year, Year 2: 15,000/30,000 × 100 = 50%. The 12.5% option uses Year 1 profit 40,000 as base wrongly (5,000/40,000).

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