Sales data for the fiscal years 2012, 2013, and 2014 for Bed Bath & Beyond follows (dollars in billions):

According to the financial statements, sales increased by 21 percent from 2012 to 2014. Assume that the general rate of inflation as well as the price increase for Bed Bath & Beyond€™s products for the period 2012 to 2014 was 4 percent.

REQUIRED:
a. Considering price increases, did sales actually increase by 21 percent from 2012 to 2014? By how much did the company€™s sales actually grow from 2012 to 2014? By what percent did sales increase?
b. If prices had increased 10 percent from 2012 to 2014, what would have been the effect on the growth of sales?
c. Describe how the stable dollar assumption could have misled the users of Bed Bath & Beyond€™s financial statements.

Transcribed Image Text:

2012 2013 2014 Sales $9.5 $10.4 $11.5