| Course | AC466 Fraud Detection and Financial Statement Analysis |
|---|---|
| Unit | Unit 3 |
| Paper type | Horizontal trend analysis |
| Length | About 540 words, 4 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | BS in Accounting |
| Updated | October 2026 |
Free sample paper for AC466 Unit 3
Acceleration or a Low Base? A Unit 3 Horizontal Trend Analysis With a Plant Shutdown Put Back
[Student Name]
Purdue University Global
AC466: Fraud Detection and Financial Statement Analysis
Unit 3 Horizontal Trend Analysis
[Instructor Name]
[Date]
Tidewell Pool Systems and every figure are composite; the textbooks and article cited are real.
Year-Over-Year Change
Revenue rose $55.7 million, or 13.6 percent, in 2024 and $82.2 million, or 17.7 percent, in 2025. Cost of goods sold rose more slowly, 12.4 and 15.3 percent, and selling and administrative expense far more slowly, 3.3 and 11.7 percent. Net income rose 36.4 and then 44.4 percent.
The lines that should track revenue did not. Receivables rose 35.2 percent and then 47.8 percent, far faster than sales in both years. Operating cash flow fell 21.2 percent and then 56.1 percent, from $52.0 million to $18.0 million, in the same two years net income nearly doubled. Cash fell 42.1 percent in 2025. Deferred service revenue fell 8.1 and then 28.6 percent while unit sales grew.
Index to 2023
With 2023 set at 100, by 2025 revenue stands at 133.7, cost of goods sold at 129.6, selling and administrative expense at 115.4, inventory at 122.4, total assets at 135.0, net income at 197.0 and receivables at 199.9. Operating cash flow stands at 34.6 and deferred service revenue at 65.6.
The index shows cumulative distance where annual changes show pace. Receivables have doubled while revenue has grown by a third; operating cash has fallen to a third of its 2023 level while net income has nearly doubled.
The Base Adjustment
Management's discussion for 2023 attributed $31 million of lost sales to a 34-day assembly shutdown after a fire at a motor supplier. Restoring that amount gives 2023 revenue of $440.2 million. Measured against the restored base, 2024 growth falls from 13.6 percent to 5.6 percent, close to the peers' 2 to 5 percent range. Growth in 2025, at 17.7 percent, is unaffected, because 2024 had no comparable disruption. The restored base also changes the reading of 2024's receivables: a 35.2 percent rise against 5.6 percent underlying growth is a wider gap than it first appears, so the divergence began a year earlier than the headline growth suggests.
Restoring the shutdown shows that the apparent acceleration is not a smooth climb but a modest recovery in 2024 followed by a sudden jump in 2025, and the 2025 jump is the year receivables grew 47.8 percent and operating cash fell by more than half.
Compound Growth
Revenue compounded at 15.6 percent a year from 2023 to 2025. That figure needs a caveat: it starts from a depressed year, so it overstates the underlying rate. From the restored base, the two-year compound rate is 11.5 percent.
What the Trends Point To
Revenue growth concentrated in one year, with receivables and accrued earnings growing faster than cash, is a pattern associated with revenue recognized ahead of collection (Dechow et al., 2011). It is not proof; a company extending generous terms to win share would show something similar. Trend analysis should always be read alongside a check for unusual base years (Subramanyam, 2014), and its findings set the questions for ratio and cash flow work in later units (Penman, 2013).
References
Dechow, P. M., Ge, W., Larson, C. R., & Sloan, R. G. (2011). Predicting material accounting misstatements. Contemporary Accounting Research, 28(1), 17-82. https://doi.org/10.1111/j.1911-3846.2010.01041.x
Penman, S. H. (2013). Financial statement analysis and security valuation (5th ed.). McGraw Hill.
Subramanyam, K. R. (2014). Financial statement analysis (11th ed.). McGraw Hill.
AC466 Unit 3 instructions, in plain terms
The third AC466 unit asks you to analyze trends across several years and separate genuine growth from base effects. Compute dollar and percentage change for each major line, year over year. Build an index with the first year set at 100 so cumulative distance is visible alongside annual pace. Identify lines that outran or lagged revenue, especially receivables, cash flow and deferred revenue. Search management's discussion for unusual events in the base year, such as a shutdown or acquisition, and restate growth with the effect removed. Report compound growth with any caveat the base year requires. Close by describing the pattern the trends suggest, its innocent alternative and the questions it sets for later analysis. Use Dechow's misstatement research and two analysis texts, cited in APA 7.
How the AC 466 Unit 3 example is put together
The sample's change section reports revenue up $55.7 million and $82.2 million, cost of goods sold and selling expense rising more slowly, and net income up 36.4 and 44.4 percent, then shows receivables up 35.2 and 47.8 percent and operating cash down 21.2 and 56.1 percent. The index section puts revenue at 133.7, receivables at 199.9 and operating cash at 34.6. The base adjustment restores $31 million of 2023 sales lost to a 34-day shutdown, cutting 2024 growth to 5.6 percent and showing that the receivables gap began earlier than it appeared. The highlighted sentence explains the result. Compound growth of 15.6 percent is qualified with an 11.5 percent restored rate. A closing section cites Dechow and colleagues, Subramanyam and Penman.
AC466 Unit 3 rubric: what earns full points
AC466 trend analyses are graded on accurate computation and on separating base effects from real change. Annual changes and an index should both appear, since each shows something the other hides. Graders reward analyses that find unusual base-year events in the filing and restate growth without them. Lines that should track revenue, such as receivables and operating cash, must be compared against it explicitly. Compound growth needs a caveat when the base year is unusual. The pattern identified should carry its innocent alternative, and the analysis should hand clear questions to later units. Overclaiming, such as calling the pattern fraud, is penalized. Clean tables and APA 7 citations finish this Purdue Global unit's grade.
AC466 Unit 3 help: mistakes that cost points
Many Unit 3 analyses report percentage changes without an index, so cumulative divergence goes unseen. Others accept headline growth without reading management's discussion for a depressed base year. Receivables and cash flow are analyzed separately from revenue rather than against it. Compound growth is reported without noting that it starts from an unusual year. The pattern is described as proof of manipulation. If your section assigned a different company or a longer period, our writers can build the change table, the index and the base adjustment from its filings.
Get an AC466 Unit 3 example written to your instructions
What a filing quantifies limits what horizontal work can adjust. For Unit 3, the assigned company's annual reports or supplied figures, any base-year event the prompt mentions, and the rubric are enough to begin. Changes come paired with their drivers, every adjustment sourced; a first custom analysis is free, returned within 24-48h. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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AC466 Unit 3 questions, answered
What is a base effect?
It is growth that reflects an unusual starting year rather than a change in the business. When 2023 revenue was depressed by a plant shutdown, 2024 growth measured from it looks strong even if demand barely moved. The analysis restores the quantified lost sales to the base and recomputes, which separates recovery from growth.
Why index to a base year as well as show annual changes?
Annual changes show pace, and an index shows cumulative distance. Receivables growing 35 and then 48 percent sounds like two separate facts; an index of 200 beside revenue at 133.7 shows in one figure that receivables doubled while sales rose by a third. Many rubrics in this course expect both views.
Can the analysis use the years my section assigned?
Yes. Send the filings or figures for whichever years the prompt specifies, the prompt itself and the rubric. Changes and indexes are computed for those years, any unusual base year your company's own discussion quantifies is restored and sourced, and the commentary names which relationships your later units should test.
Where can I find a free AC466 Unit 3 sample paper?
This page holds a complete AC466 Unit 3 horizontal trend analysis of Tidewell Pool Systems, a composite company, with year-over-year changes, a 2023 index, a shutdown base adjustment and APA 7 references.
How does the shutdown change growth in AC466 Unit 3?
Restoring $31 million of 2023 sales lost to a supplier fire raises the 2023 base to $440.2 million, so 2024 growth falls from 13.6 percent to 5.6 percent. 2025 growth of 17.7 percent is unaffected.