Question

Express the following comparative income statements in common-size percents. (Round your percentage answers to 1 decimal place.) GOMEZ CORPORATION Comparative Income Statements For Years Ended December 31. 2017 and 2016 2017 2016 Sales Cost of goods sold Gross profit Operating expenses Net income $ 730,000 562,700 167,300 130,400 $ 36,900 $ 675,000 293,200 381,800 273,200 $ 108,600 Has the company's situation improved in the most recent year? O Yes O No

Answer 1

Ans:

For preparing the common-size percentage, all the amounts in the income statement would be divided by the sales. Sales percentage should be 100%. Based on the sales value, remaining percentages are calculated.

Gomez Corporation
Comparative Income Statements
For the years ended December 31, 2017 and 2016
	2017			2016
Particulars	Amount $	%	Amount $	%
Sales	730,000	100%	675,000	100%
Cost of goods sold	562,700	77.1%	293,200	43.4%
Gross Profit	167,300	22.9%	381,800	56.6%
Operating Expenses	130,400	17.9%	273,200	40.5%
Net Income	36,900	5.1%	108,600	16.1%

b)

No Company performance has Decreased over the most recent year

- why because the gross profit percentage and net income percentage has Decreased in 2017.