Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Common-size statement analysis A common-size income statement for Creek Enterprises 2018 operations follows Using the firm's 2019 income statement develop the 2019 common-size income statement

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Common-size statement analysis A common-size income statement for Creek Enterprises 2018 operations follows Using the firm's 2019 income statement develop the 2019 common-size income statement and compare it to the 2018statement. Which areas require further analysis and investigation? Complete the common-size income statement for the year ending December 31, 2019 and compare it to the common-size income statement for the year ending December 2018: (Round to one decimal place.) Creek Enterprises Common-Size Income Statement for the Years Ended December 31, 2018 and December 2019 2019 2018 % 100.0 % 66.1 Sales revenue Less: Cost of goods sold Gross profits Less: Operating expenses % 33.9% Sales revenue % 100.0 % 66.1 % 33.9 % % 12.7 % Less: Cost of goods sold Gross profits Less: Operating expenses Selling expense General and administrative expenses Lease expense Depreciation expense Total operating expense Operating profits 6.3 0.3 3.7 23.0 % 10.9 % 3.7 23.0 % 10.9 % 0.9 % Depreciation expense Total operating expense Operating profits Less: Interest expense Net profits before taxes Less: Taxes (rate = 40%) Net profits after taxes Less: Preferred stock dividends Earnings available for common stockholders 10.0 % 4.0 % 6.0 % 0.2 % 5.8 % 100.0 % 66.1 33.9 % Creek Enterprises Income Statement for the Year Ended December 31, 2018 Sales revenue ($35,026,000) Less: Cost of goods sold Gross profits Less: Operating expenses Selling expense 12.7 % General and administrative expenses 6.3 Lease expense 0.3 Depreciation expense 3.7 Total operating expense Operating profits Less: Interest expense Net profits before taxes Less: Taxes (rate = 40%) Net profits after taxes 23.0 10.9 % 0.9 10.0 % 4.0 6.0 % psti 66.1 33.9 % 12.7 % 6.3 0.3 3.7 Less: Cost of goods sold Gross profits Less: Operating expenses Selling expense General and administrative expenses Lease expense Depreciation expense Total operating expense Operating profits Less: Interest expense Net profits before taxes Less: Taxes (rate = 40%) Net profits after taxes Less: Preferred stock dividends Earnings available for common stockholders 23.0 10.9 % 0.9 10.0 % 4.0 6.0 % an no 0.2 5.8 % Creek Enterprises Income Statement for the Year Ended December 31, 2019 Sales revenue $29,988,000 Less: Cost of goods sold 21,048,000 Gross profits $8,940,000 Less: Operating expenses Selling expense $2,963,000 General and administrative expenses 1,844,000 Lease expense 160,000 Depreciation expense 1,017,000 Total operating expense 5,984,000 Operating profits $2,956,000 Less: Interest expense 970,000 Net profits before taxes $1,986,000 Less: Taxes (rate = 40%) 794,400 Net profits after taxes $1,191,600 21,048,000 $8,940,000 $2,963,000 1,844,000 160,000 1,017,000 Less: Cost of goods sold Gross profits Less: Operating expenses Selling expense General and administrative expenses Lease expense Depreciation expense Total operating expense Operating profits Less: Interest expense Net profits before taxes Less: Taxes (rate = 40%) Net profits after taxes Less: Preferred stock dividends Earnings available for common stockholders 5,984,000 $2,956,000 970,000 $1,986,000 794,400 $1,191,600 142,000 $1,049,600

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Trade Finance

Authors: Indian Institute Of Banking & Finance

1st Edition

9386394723, 978-9386394729

More Books

Students also viewed these Finance questions

Question

D How will your group react to this revelation?

Answered: 1 week ago