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CS Executive · Corporate Accounting and Financial Management · Financial Statement Analysis

Kaveri Ltd reported sales of ₹8,00,000 in the base year (index 100), ₹9,20,000 in Year 2 and ₹10,40,000 in Year 3. Using trend percentages with the base year as 100, what is the Year 3 index?

The Year 3 trend index is 130. Dividing Year 3 sales of ₹10,40,000 by base-year sales of ₹8,00,000 and multiplying by 100 gives 130. The base year is always fixed at 100, so Year 2 as the base would wrongly give about 113.

  1. A113
  2. B115
  3. C130Correct
  4. D140

Explanation

Trend index = Year 3 figure / base-year figure × 100 = 10,40,000 / 8,00,000 × 100 = 130. Check: 130% of 8,00,000 = 10,40,000. The figure 115 is the Year 2 index, and 113 wrongly uses Year 2 as base (10,40,000/9,20,000 ≈ 113).

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