Holiday Greeting Cards is a local company organized late in July of 2014. The company’s net income for each of its first six calendar quarters of operations is summarized below. (Amounts are stated in thousands of dollars.)

Hal Holcomb reports the business and economic news for a local radio station. On the day that Holiday Greeting Cards released the above financial information, you heard Holcomb make the following statement during his broadcast: “Holiday Greeting Cards enjoyed a 350 percent increase in its profits for the fourth quarter, and profits for the entire year were up by over 100 percent.”

Instructions

a. Show the computations that Holcomb probably made in arriving at his statistics.

b. Do you believe that Holcomb’s percentage changes present a realistic impression of Holiday Greeting Cards’s rate of growth in 2015? Explain.

c. What figure would you use to express the percentage change in Holiday’s fourth-quarter profits in 2015? Explain why you would compute the change in this manner.

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2014 2015 First quarter (Jan. through Mar.) Second quarter (Apr. through June) Third quarter (July through Sept.) Fourth quarter (Oct. through Dec.) Total for the calendar year $ 253 308 -0- -0- $ 50 100 450 500 $1,111 $550