Ten Peaks Coffee Company Inc. is a Burnaby, British Columbia-based specialty coffee company. The company provides green coffee decaffeination services as well as green coffee handling and storage services. Exhibit 4.13 contains an excerpt from Ten Peaks’ 2016 annual report.

EXHIBIT 4.13 Ten Peaks Coffee Company Inc.’s 2016 Consolidated Statements of Income

Required 

a. Calculate Ten Peaks’ gross profit percentage for 2016 and 2015. Has it improved? 

b. Using the financial statements in Appendix A, calculate Dollarama’s gross profit percentage for the same periods. How do they compare with Ten Peaks’ percentages? 

c. Does Ten Peaks prepare its consolidated income statement using a single-step or a multi-step approach? 

d. Does Ten Peaks present its expenses by function or by nature? Does this approach require a higher level of management judgement when preparing the statement?

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TEN PEAKS COFFEE COMPANY INC. Consolidated Statements of Income (Tabular amounts in thousands of Canadian dollars) for the 12 months ended 12 months ended December 31, December 31, Note 2016 2015 $ 81,927 $ 83,641 Revenue Cost of sales (69,877) (72,328) Gross profit 12,050 11,313 Operating expenses Sales and marketing expenses (2,398) (2,341) (136) (137) Occupancy expenses Administration expenses (4,499) (4,961) Total operating expenses (7,033) (7,439) Operating income 5,017 3,874 Non-operating or other Finance (expense) income (4) 21 Gain on risk management activities 1,073 Loss on derivative financial instruments (435) (1,158) Gain (loss) on foreign exchange (892) 91 Total non-operating (2,029) 725 Income before tax 5,742 1,845 Income tax expense Net income for the year (1,593) (533) 12 $ 1,312 $ 4,149 Earnings per share $ 0.17 Basic and diluted (per share) 0.46 22 %24