Income statement relations. Selected income statement information for Pfizer, a pharmaceutical company, for three recent years appears below (amounts in millions):

Year 10 Year 11 Year 12 Sales $26,045 Cost of Goods Sold 3,755 Selling and Administrative Expenses 9,566 Research and Development Expense 4,374 Income Tax Expense 3,074 Net Income ?

$32,373

$3,823 9,717 10,846 4,776 5,176 2,720 2,830 7,988 9,476

a. Compute the missing amounts for each of the three years.

b. Prepare a common-size income statement for each year, in which sales equals 100 percent and each expense and net income are expressed as a percentage of sales. What factors appear to explain the change in the ratio of net income to sales?