Evaluating Income A friend of yours has a copy of Goody Corporation’s financial statements for 2000, and the following comparative income statement information is included:

Although your friend was told by a relative about the wonderful prospects for Goody Corporation’s future sales and the way management has taken control of the company, your friend is skeptical and would like your opinion. Goody Corporation is a small company, and its financial statements are not audited. Which income statement items would you like to explore in more detail? Explain why.

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2000 Revenue $800,000 1999 $600,000 Cost of goods sold and other operating expenses (400,000) (420,000) Operating income $400,000 $180,000 Other income 250,000 60,000 Income before taxes $650,000 $240,000 Income taxes (260,000) 96,000 Net income $390,000 $336,000