A common size income statement for creek enterprises

A Common-Size Income Statement For Creek Enterprises 2014

Part II P3-20 Common-size statement analysis

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