Question
Common-size statement analysisA common-size income statement for Creek Enterprises' 2018 operations follows LOADING... . Using the firm's 2019 income statement LOADING... , develop the 2019
Common-size statement analysisA common-size income statement for Creek Enterprises'
2018
operations follows
LOADING...
.
Using the firm's
2019
income statement
LOADING...
,
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 | ||||||
Sales revenue | 100.0 | % | 100.0 | % | ||||
Less: Cost of goods sold | 70.0 |
| 65.5 |
| ||||
Gross profits | 30.0 | % | 34.5 | % | ||||
Less: Operating expenses |
|
| ||||||
Selling expense |
| % |
| 12.6 | % |
| ||
General and administrative expenses |
|
| 6.2 |
| ||||
Lease expense |
|
| 0.4 |
| ||||
Depreciation expense |
|
|
| 3.6 |
|
| ||
Total operating expense |
|
| 22.8 |
| ||||
Operating profits |
| % | 11.7 | % | ||||
Less: Interest expense |
|
| 1.3 |
| ||||
Net profits before taxes |
| % | 10.4 | % | ||||
Less: Taxes (rate = 40%) |
|
| 4.2 |
| ||||
Net profits after taxes |
| % | 6.2 | % | ||||
Less: Preferred stock dividends |
|
| 0.2 |
| ||||
Earnings available for common stockholders |
| % | 6.0 | % |
TABLES Creek Enterprises Income Statement for the Year Ended December 31, 2018 Sales revenue ($34,964,000) 100.0 % Less: Cost of goods sold 65.5 Gross profits 34.5 % Less: Operating expenses Selling expense 12.6 % General and administrative expenses 6.2 Lease expense 0.4 Depreciation expense 3.6 Total operating expense 22.8 Operating profits 11.7 % Less: Interest expense 1.3 Net profits before taxes 10.4 % Less: Taxes (rate=40%) 4.2 Net profits after taxes 6.2 % Less: Preferred stock dividends 0.2 Earnings available for common stockholders 6.0 %
Creek Enterprises Income Statement for the Year Ended December 31, 2019 Sales revenue $30,034,000 Less: Cost of goods sold 21,018,000 Gross profits $9,016,000 Less: Operating expenses Selling expense $2,967,000 General and administrative expenses 1,796,000 Lease expense 193,000 Depreciation expense 1,002,000 Total operating expense 5,958,000 Operating profits $3,058,000 Less: Interest expense 954,000 Net profits before taxes $2,104,000 Less: Taxes (rate=40%) 841,600 Net profits after taxes $1,262,400 Less: Preferred stock dividends 131,000 Earnings available for common stockholders $1,131,400
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started