Question

Learning Goals 5 P3–19 Common-size statement analysis A common-size income statement for Creek Enterprises' 2018 operations follows. Using the firm's 2019 income statement presented in Problem 3–169, develop the 2019 common-size income statement and compare it with the 2018 statement. Which areas require further analysis and investigation? Creek Enterprises Common-Size Income Statement for the Year Ended December 31, 2018 Sales revenue ($35,000,000) 100.0% Less: Cost of goods sold 65.9 Gross profits 34.1% Less: Operating expenses Selling expense 12.7% General and administrative expenses 6.3 Lease expense 0.6 Depreciation expense 3.6 Total operating expense 23.2% Operating profits 10.9% Less: Interest expense 1.5 Net profits before taxes 9.4% Less: Taxes (rate = 21%) 2.0 Net profits after taxes 7.4% >

Answer 1

Creek Enterprises Common-Size Income Statement for the Year Ended December 31, 2018

Sales Revenue	$35,000,000
Less ; Cost of Goods Sold	$23,065,000
Gross Profits	$11,935,000
Less : Operating Expenses
Selling Expenses	$4,445,000
General & administrative Expenses	$2,205,000
Lease Expenses	$210,000
Depreciation Expenses	$1,260,000
Total Operating Expenses	$8,120,000
Operating Profits	$3,815,000
Less : Interest Expenses	$525,000
Net Profit before Taxes	$3,290,000
Less : Tax (rate = 21%)	$700,000
Net Profit after Taxes	$2,590,000
Less: Preferred stock Dividend	$35,000
Earning Available for common stock holders	$2,555,000