Question

Crane Burgers operates and franchises fast-food restaurants specializing in grilled hamburgers and chicken sandwiches. The 2015 and 2016 income statements are as follows (in $000s): Year Ended December 31, 2016 December 31, 2015 $41,261 $40,573 Total revenues Expenses Cost of restaurant sales 11,140 11,090 Restaurant operating expenses 16,917 16,732 General and administrative 6,827 5,299 Advertising 2.554 2,672 2,120 Depreciation and amortization 2,216 Impairment of long-lived assets 988 Total expenses 40,642 37,913 Operating income $619 $2,660 Prepare a common-size analysis of this section of Crane Burgers'income statement. Your answers may not add perfectly due to rounding (Round answers to 1 decimal place, eg. 50.2%) 2016 2015 Total Revenues Expenses Cost of restaurant sales Restaurant operating expenses General and administrative Advertising Depreciation and amortization Impairment of long-lived assets Total expenses Operating income

Answer 1

Divide each line item by sales for common size percentages.

Answer:

	Dec 31,2016	Dec 31, 2015
Total revenues	100%	100%
Expenses
Cost of restaurant sales	27.0%	27.3%
Restaurant opening expenses	41.0%	41.2%
General and administrative	16.5%	13.1%
Advertising	6.2%	6.6%
Depreciation and amortization	5.4%	5.2%
Impairment of long lived assets	2.4%	0%
Total expenses	98.5%	93.4%
Operating income	1.5%	6.6%