P3-20 A common-size income statement for Creek Enterprises’ 2014
operations follows. Using the firm’s 2015 income statement presented in Problem
3–18, 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
|
Creek
Enterprises
Income
Statement for the Year Ended
December
31, 2015
|
|
|
Sales
revenue ($35,000,000)
100.0%
|
Sales Revenue
$30,000,000
|
|
|
Less:
Cost of goods sold
65.9
|
Less:
Cost of goods sold 21,000,000
|
|
|
Gross profits
34.1%
|
Gross
profits $ 9,000,000
|
|
|
Less:
Operating expenses
|
Less:
Operating expenses
|
|
|
Selling expense
12.7%
|
Selling expense $ 3,000,000
|
|
|
General and administrative expenses
6.3
|
General and administrative expenses 1,800,000
|
|
|
Lease
expense 0.6
|
Lease expense 200,000
|
|
|
Depreciation
expense
3.6
|
Depreciation
expense 1,000,000
|
|
|
Total
operating
expense
23.2
|
Total operating expense $6,000,000
|
|
|
Operating
profits
10.9%
|
Operating profits $ 3,000,000
|
|
|
Less:
Interest
expense
1.5
|
Less:
Interest expense 1,000,000
|
|
|
Net
profits before
taxes 9.4%
|
Net profits before taxes $ 2,000,000
|
|
|
Less:
Taxes (rate 5
40%) 3.8
|
Less:
Taxes (rate 5 40%) 800,000
|
|
|
Net
profits after
taxes 5.6%
|
Net profits after taxes $ 1,200,000
|
|
|
Less:
Preferred stock
dividends
0.1
|
Less:
Preferred stock dividends 100,000
|
|
|
Earnings
available for common
stockholders 5.5%
|
Earnings available for common stockholders$ 1,100,000
|
|
TUTORIAL
PREVIEW
|
Creek Enterprises
Common-Size Income Statement
For the Years Ended December 31, 2014,
& 2015
|
||
|
2014
|
2015
|
|
|
Sales Revenue ($35,000,000)
|
100%
|
100.0%
|
|
Less: Cost of Goods Sold
|
65.9%
|
70.0%
|
File name P3-20 Creek Enterprises.xlsx File type: xlsx PRICE:$9
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