question 1

Conduct a horizontal analysis of the Balance Sheet and Income Statement items, analyze thetrends, identify problems. (20 points)

Conduct a common size analysis of the Balance Sheet and Income Statement items,comment on the results. (20 points)

Combine the results of the horizontal and common size analyses and make a comprehensive commentary of the firms financial health. (30 points)

AVIS RENT-A-CAR

INCOME STATEMENT ($

millions)

	2015	2016	2017	2018	2019
Sales	24,455	25,477	26,858	28,374	30,052
Cost of Goods Sold	20,391	21,448	22,480	24,023	24,826
Gross Profit	4,064	4,029	4,378	4,351	5,226
Depreciation	1,374	1,391	1,426	1,416	1,425
Operating Profit	2,690	2,638	2,952	2,935	3,801
Interest Expense	655	955	2,215	2,021	1,987
Non-Operating Income/Expense	412	179	661	256	188
Pretax Income	2,327	1,862	1,398	1,170	2,002
Total Income Taxes	725	625	316	268	627
Minority Interest	178	201	208	229	321
Net Income	1,424	1,036	874	673	1,054