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problem: A common size income statement for Creek Enterprises' 2005 operations follows. Using company's 2006 income statement presented in Problem 2-12, create the 2006 common size income statement & compare it to 2005 statement. Determine which areas require further analysis & investigation?

Creek Enterprises Common-Size Income Statement for the Year Ended December 31, 2005

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

 

Creek Enterprises Common-Size Income Statement for the Year Ended December 31, 2005

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 = 40%)

3.8

Net profits after taxes

5.6%

Less: Preferred stock dividends

0.1

Earnings available for common stockholders

5.5%

Cost Accounting, Accounting

  • Category:- Cost Accounting
  • Reference No.:- M922691

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