A common-size income statement for Creek Enterprises’ 2018 operations follows. Using the firm’s 2019 income statement presented in Problem 3–16, develop the 2019 common-size income statement and compare it with the 2018 statement. Which areas require further analysis and investigation?

    Creek Enterprises Common-Size Income Statement
                for the Year Ended December 31, 2018
Sales revenue ($35,000,000) ......................................100.0%
Less: Cost of goods sold .................................................65.9
Gross profits ..................................................................34.1%
Less: Operating expenses
Selling expense ..............................................................12.7%
General and administrative expenses 6.3
Lease expense ....................................................................0.6
Depreciation expense ........................................................3.6
Total operating expense ...............................................23.2%
Operating profits ...........................................................10.9%
Less: Interest expense .......................................................1.5
Net profits before taxes .................................................9.4%
Less: Taxes (rate = 40%) ....................................................3.8
Net profits after taxes ....................................................5.6%
Less: Preferred stock dividends .......................................0.1
Earnings available for common stockholders .............5.5%