Question

During the years 2015 through 2017, Question Query Inc., reported the following amounts of net income (in thousands of dollars):

2015 2016 2017
$120 $150 $170

Relative to the prior year, the percentage change in net income:

was the same in 2015 and 2016

was the same in 2016 and 2017

was smaller in 2017 than 2016

cannot be determined without knowing the net sales for the three years

Answer 1

was smaller in 2017 than 2016

Step-by-step explanation:

The percentage change in net income relative to prior year would be given as the net difference between the two years income divided by the net income for the prior year.

As such,

the percentage change in net income

2015

= (120 - 0)/0

= ∞

2016

= (150 - 120)/120

= 25%

2017

= (170 - 150)/150

= 13.33%

Answer 2

The percentage change in net income was smaller in 2017 than 2016.

Step-by-step explanation:

The percentage change in net income in 2016 was:

⇒ 150/120 -1 = 0.25 or 25%.

Whereas, the percentage change in net income in 2017 was:

⇒ 170/150 -1 = 0.1333 or 13.33%.

Hence, this statement is correct that percentage change in 2017 was 13.33% which was smaller than percentage change of 25% in 2016.