Now, let's discuss another tool for financial analysis, trend percentages. Trend percentages are a similar form of horizontal analysis. It's going to show us trends in certain accounts, so it's going to help us note whether this account has been growing over the years, whether income has been growing or falling since our base year. Okay, so what we're going to do is we're going to choose a base year, which is generally the oldest year that we're showing and then we're going to calculate our trend percentage just like we see here. We're going to take the year's amount that we're talking about and we'll divide it by the base year's amount and we'll multiply it by a 100 to make it into a percentage. Okay? So the easiest way to see this is through an example. So let's go ahead and do this example right here.

So, we're going to compute the trend percentages for income from operations and if they don't give you a base year, you can assume that the oldest year is the base year. Okay? Let's go ahead and calculate our trend percentages. So what we're going to do is we're going to take that year's amount, so in this case, it's the oldest year and the trend percentage is always going to be a 100% in the base year times a 100. So 842 divided by 842 is obviously 1 times a 100 is a 100%, right? It's going to be a 100% in the base year.

Now let's move on to 2015, the next year. So in this year, we need to take that year's amount which is 1,129,000 and divide it by the base year of 842,000 and then we multiply it by a 100 to turn it into a percentage, so 1,129,000842,000 and then we multiply by a 100, this comes out to, we'll just round it to the nearest percent, it's going to be a 134%, right? This tells us that our income from operations in 2015 was a 134% of what it was in 2014. Cool? So, this shows the trend of growth since that year.

Let's go on to the next one. So in 2016, same thing. We take that year's number, 1,406 and divide it by the base year, 842,000. We multiply by a 100 to get to our percentage, so 1,406842,000 comes out to, a 167% will round it to the nearest percentage there. A 167%. So that's a 167% of our base year.

Let's go on to 2017. Now we're at 862,000 divided by our base year of 842,000. So notice our denominator always stays the same and we multiply by a 100. This is pretty easy, right? 862842 times a 100, so this one comes out to a 102%. So notice, these trends kind of give us some information. It shows that we were growing and growing and then it started decreasing again, right? We were growing in 2015, 2016, and now we've had a sharp decrease in 2017 and now look what happens in 2018. We had 676,000 divided by our base year of 842,000, so clearly this is going to be under a 100 because we have less income than our base year. So 676,000842,000 times a 100, so that comes out to approximately 80%. So notice our income in 2018 has dropped, so this shows us the trend of our income from operations over the years. That's why these are called trend percentages. So, the calculation isn't that tough. Why don't you guys try practicing down below?