Question

Income Statements

For the four years ended December 31, 2004

(in 000’s except per share amounts)

	2004	2003	2002	2001
Net Revenues and Gains	$27,500	$26,300	$25,100	$20,900
Expenses and Losses
Cost of Sales	15,200	12,150	9,845	9,200
Operating Expenses	3,160	3,075	2,890	2,300
Other	4,570	3,966	3,146	2,214
Taxes	1,690	2,671	3,318	2,515
Net Income	$2,880	$4,438	$5,901	$4,671
Common Shares Outstanding	3,000	3,000	3,000	3,000 -perform ratio analysis on the four year’s income​ -Calculate standard profitability ratios (Return on Sales, Gross Profit Margin, Earnings per share, plus any other analysis you wish to perform.)

Answer 1

4-years ratio analysis

Particulars	2004	2003	2002	2001
1.Net Revenue & gains	27500	26300	25100	20900
2. Cost of sales	15200	12150	9845	9200
3. Gross profit (1-2)	12300	14150	15255	11700
4. Operating expenses	3160	3075	2890	2300
5.Other expenses	4570	3966	3146	2214
6.Taxes	1690	2671	3318	2515
7.Net income ( 3-4-5-6)	2880	4438	5901	4671
8.Total no. of outstanding shares	3000	3000	3000	3000
Ratio analysis:-
1. Gross profit margin ratios{(3÷1)*100}%	44.7273%	53.8023%	60.7769%	55.9809%
2.Net return on sales {(7÷1)*100%}	10.4727%	16.8745%	23.5100%	22.3493%
3.Earnings per share (EPS) (7÷8)	0.96	1.48	1.97	1.56

Therefore year 2002 was the most efficient in term of earnings and profitability following years 2001, 2003 and 2004.