A company’s revenue increased by 15% in the first year and then decreased by 10% in the second year. If the initial revenue was $100,000, what is the revenue at the end of the second year? - Abbey Badges
Revenue Walkthrough: How a Company’s Income Grows and Declines Over Two Years
Revenue Walkthrough: How a Company’s Income Grows and Declines Over Two Years
In the dynamic world of business, measuring revenue performance is crucial to understanding a company’s financial health and growth trajectory. Recent reports highlight a compelling pattern: a company’s revenue surged by 15% in its first year, only to dip by 10% in the second year. But what does this real-world financial shift mean, and what does the final revenue figure reveal?
Year 1: Strong Growth Sets the Stage
Starting with an initial revenue of $100,000, the company achieved robust growth, increasing its income by 15%. This represents:
$100,000 × 15% = $15,000 increase,
bringing Year 1’s total revenue to $115,000.
Understanding the Context
This growth reflects strategic initiatives, market momentum, or successful product launches—positive signs for stakeholders and investors.
Year 2: Revenue Declines Amid Market Challenges
The second year brought a 10% decrease from Year 1’s total:
$115,000 × 10% = $11,500 reduction,
leading to a final revenue of $115,000 – $11,500 = $103,500 at the end of Year 2.
Despite the decline, this figure demonstrates resilience—posting a net increase of just $500 compared to the prior year, yet avoiding a full downturn.
Why This Pattern Matters
Such fluctuations are common in evolving markets and serve as critical learning points. While short-term revenue swings can signal external pressures—like economic shifts or increased competition—the company’s ability to remain profitable (with revenue still over $100k) demonstrates operational strength and effective risk management.
Key Insights
Conclusion: Balanced Outcomes Signal Sustainability
A 15% spike followed by a 10% drop results in a net gain of 5% over the first year’s revenue—ending the two years with $103,500. This performance underscores the importance of long-term strategy and adaptability in sustaining growth amid uncertainty.
For businesses navigating similar cycles, monitoring revenue changes year-over-year remains essential. It helps identify key drivers, refine forecasting models, and build sustainable paths forward—turning volatility into opportunity.
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Key Takeaways:
- Year 1: $100,000 → $115,000 (+15%).
- Year 2: $115,000 → $103,500 (−10%).
- Final Revenue After Two Years: $103,500.
Stay informed. Track your numbers. Grow wisely.
