Question

Pippin Piping Co. manufactures decorative fabric trims. The company's financial statements follow. Pippin Piping Co. Comparative Income Statements For the Years Ended December 31 2016 2015 Sales revenue $576,600 $523,000 Cost of goods sold 291,000 259,200 Gross margin 285,600 263,800 Operating expenses 106,200 104,600 Operating income 179,400 159,200 Other revenue 22,500 15,900 Interest expense 11,200 10,500 Income before income tax 190,700 164,600 Income tax expense (40%) 76,280 65,840 Net income $114,420 $98,760 2014 $484,200 234,300 249,900 104,100 145,800 23,900 11,900 157,800 63,120 $94,680

Answer 1

Pippin Piping Co
Income Statement
Common Size
	2016	2015	2014
Sales	100.0%	100.0%	100.0%
Cost of goods sold	50.5%	49.6%	48.4%
Gross Margin	49.5%	50.4%	51.6%
Operating expense	18.4%	20.0%	21.5%
Operating Income	31.1%	30.4%	30.1$
Other revenues	3.9%	3.0%	4.9%
interest expenses	1.9%	2.0%	2.5%
income before income taxes	33.1%	31.5%	32.6%
income tax expense	13.2%	12.6%	13.0%
Net income	19.8%	18.9%	19.6%

Pippin Piping Co
Balance Sheet
Common size
Assets	2016	2015	2014
Cash	3.6%	3.1%	2.9%
Accounts receivables	14.1%	15.5%	13.2%
Inventory	6.7%	9.8%	7.8%
Prepaid expenses	1.2%	1.2%	0.6%
Total Current assets%	25.6%	29.7%	24.5%
property plant and equipment	74.4%	70.3%	75.5%
Total assets	100.0%	100.0%	100.0%
Liabilities and stockholder's equity
accounts payable	5.9%	9.9%	11.1%
accrues expenses	1.2%	1.5%	5.8%
Total Current liabilities	7.1%	11.4%	16.9%
Long term debts	18.9%	19.5%	21.0%
Total liabilities	26.0%	30.9%	37.8%
stockholder's equity
common stock	0.7%	0.7%	0.7%
Additional; paid in capital	11.0%	12.1%	8.7%
Retained earnings	62.3%	56.3%	52.8%
Total Stockholder's equity	74.0%	69.1%	62.2%
Total Liabilities and stockholder's equity	100.0%	100.0%	100.0%