The following data (in millions) are taken from the financial statements of Target Corporation:

The following data (in millions) are taken from the financial statements of Target Corporation:

                                    Recent | Prior
                                        Year | Year
Revenue                     $72,618 | $71,279
Operating expenses      68,083 | 66,109
Operating income       $ 4,535 | $  5,170

a. For Target Corporation, determine the amount of change in millions and the percent of change (round to one decimal place) from the prior year to the recent year for:
1. Revenue
2. Operating expenses
3. Operating income

b. What conclusions can you draw from your analysis of the revenue and the total operating expenses?


Answer:
a.
1. Revenue:
$1,339 million increase ($72,618 – $71,279)
1.9% increase ($1,339 ÷ $71,279)

2. Operating expenses:
$1,974 million increase ($68,083 – $66,109)
3.0% increase ($1,974 ÷ $66,109)

3. Operating income:
–$635 million decrease ($4,535 – $5,170)
–12.3% decrease (–$635 ÷ $5,170)

b. During the recent year, revenue increased by 1.9%, while operating expenses increased by 3.0%. As a result, operating income decreased by –12.3%, from the prior year.