Refer to the income statement below for The Gap, Inc.

Consolidated Statement of Earnings

Fiscal year ended Jan 31, 2015 Feb 1, 2014

Net Sales $16,435 $16,148

Cost of goods sold and occupancy expenses 10,146 9,855

Gross profit 6,289 6,293

Operating expenses 4,206 4,144

Operating income 2,083 2,149

interest expense 75 61

interest income (5) (5)

income before income taxes 2,013 2,093

income taxes 751 813

Net earnings $1,262 $1,280

a. Prepare common-size income statements for fiscal years 2014 (ending January 31, 2015) and 2013 (ending February 1, 2014).

b. Prepare a pro forma income statement for the fiscal year 2015 (ending January 30, 2016), based on the following assumptions:

- Net sales total $15,000 million.

- Cost of goods sold and occupancy expenses are 64% of sales.

- Operating expenses total 26% of sales.

- Interest income and interest expense are unchanged from the 2014 amounts.

- The Gap's effective tax rate is 39%.

c. Given the Gap's business strategy, what are the factors that ultimately determine the accuracy of the pro forma statement prepared in b?