Question

Common-size statement analysis A common-size income statement for Creek Enterprises' 2018 operations follows E Using the firm's 2019 income statements, develop the 2019 common-size income statement and compare it to the 2018statement. Which areas require further analysis and investigation? Complete the common-size income statement for the year ending December 31, 2019 and compare it to the common-size income statement for the year ending December 2018: (Round to one decimal place.)

Answer 1

2018 100.0 66.0 34.0 Answer: Creek Enterprises Common Size Income Statement For the Years Ended December 31, 2018 and December 2019 2019 Sales Revenue 100.0 Less: Cost of Goods Sold 70.2 Gross Profits 29.8 Less: Operating Expenses Selling Expense 10.1 General and Administrative Expenses 5.9 Lease Expense 0.7 Depreciation Expense 3.4 Total Operating Expense 20.2 Operating Profits 9.6 Less: Interest Expense 3.2 Net Profit before Taxes Less: Taxes (Rate = 21%) 1.3 Net Profits after Taxes Less: Preferred Stock Dividends 0.3 Earnings available for Common Stockholders 12.6 6.2 0.4 3.7 22.9 11.1 1.9 6.3 9.2 1.9 5.0 4.7 7.1

Conclusion:

There has been a decline in Sales over the year, but the Cost of Goods sold has increased, which leads to decrease in Gross Profit. The Net Profit after taxes, Earnings available for Common Stockholders has also decreased.