Question

(Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Creek Enterprises Income Statement for the Year Ended December 31, 2015 Sales revenue Less: Cost of goods sold Gross profits Less: Operating expenses $29,987,000 20,980,000 $9,007,000 $3,041,000 1,818,000 183,000 956,000 Selling expense General and administrative expenses Lease expense Depreciation expense Total operating expense Operating profits Less: Interest expense Net profits before taxes Less: Taxes (rate= 40%) Net profits after taxes Less: Preferred stock dividends Earnings available for common stockholders 5,998,000 $3,009,000 973,000 $2,036,000 814,400 $1,221,600 132,000 $1,089,600

Answer 1

In common size income statement, every item of the income statement is shown as percentage of sales. Common size statements are important tool to make the data comparable as the base is 100 for all the periods. By using common size statement we can easily compare financial results of two or more periods and also with financial results of other companies Creek Enterprise Commons size income statement for the year ended December 31, 2015 2015 2014 Particulars Sales revenue Less: Cost of goods sold Gross profits Less: Operating expenses Selling expenses (3041000/29987000*100) General and admin expenses (1818000/29987000 100) Lease expenses (183000/29987000*100) Depreciation expenses (956000/29987000*100) Total operating expenses Operating profits Less: Interest expenses (973000/29987000 100) Net profits before taxes Less: Taxes @ 40% (81 4400/29987000*100) Net profits after taxes Less: Preferred stock dividends (132000/29987000*100) Earnings available for common shareholders 100.00 69.96 30.04 100.00 65.90 34.10 10.14 12.30 6.06 6.40 0.61 0.40 3.19 3.50 20.00 10.03 3.24 6.79 2.72 4.07 0.44 22.60 11.50 1.00 10.50 4.20 6.30 0.20 3.63 6.10 Please provide your valuable feedback if the answer is helpful