Question
Common-size statement analysis A common-size income statement for Creek Enterprises? 2014 operations follows. Using the firm?s 2015 income statement presented in Problem 3?18, develop the
Common-size statement analysis
A common-size income statement for Creek Enterprises?
2014 operations follows. Using the firm?s 2015 income statement presented in
Problem 3?18, develop the 2015 common-size income statement and compare it with
the 2014 statement. Which areas require further analysis and investigation?
Creek Enterprises Common-Size Income Statement for the Year Ended December 31, 2014
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 5 40%) 3.8
Net profits after taxes 5.6%
Less: Preferred stock dividends 0.1
Earnings available for common stockholders 5.5%
A common-size income statement for Creek Enterprises?? 2014 operations follows. Using the firm??s 2015 income statement presented in Problem 3??18, develop the 2015 common-size income statement and compare it with the 2014 statement. Which areas require further analysis and investigation? Creek Enterprises Common-Size Income Statement for the Year Ended December 31, 2014 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 5 40%) 3.8 Net profits after taxes 5.6% Less: Preferred stock dividends 0.1 Earnings available for common stockholders 5.5% Common-size statement analysisStep by Step Solution
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