P3â20 Common-size statement analysis A common-size income statement for Creek Enterprisesâ
2014 operations follows. Using the firmâs 2015 income statement presented in
Problem 3â18, 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%
Creek Enterprises Common-Size Income Statement For the Years Ended December 31, 2014 and 2015 2015 2014 Sales revenue ($30,000,000) Less: Cost of goods sold Gross profits Less: Operating expenses Selling expense General and administrative expenses Lease expense Depreciation expense Total operating expense Operating profits Less: Interest expense Net profits before taxes Less: Taxes (rate = 40%) Net profits after taxes
P3â20 Common-size statement analysis A common-size income statement for Creek Enterprisesâ
2014 operations follows. Using the firmâs 2015 income statement presented in
Problem 3â18, 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%
Creek Enterprises | ||||
Common-Size Income Statement | ||||
For the Years Ended December 31, 2014 and 2015 | ||||
2015 | 2014 | |||
Sales revenue ($30,000,000) | ||||
Less: Cost of goods sold | ||||
Gross profits | ||||
Less: Operating expenses | ||||
Selling expense | ||||
General and administrative expenses | ||||
Lease expense | ||||
Depreciation expense | ||||
Total operating expense | ||||
Operating profits | ||||
Less: Interest expense | ||||
Net profits before taxes | ||||
Less: Taxes (rate = 40%) | ||||
Net profits after taxes | ||||