Question

Detail and Analyze the operations below?

COMMON-SIZE STATEMENT OF OPERATIONS (in percentages)
	2016	2015
Operating Revenues:
Software Licenses	36%	39.1%
Maintenance and Support	56%	53.7%
Professional services	8.1%	7.2%
Total Revenues	100%	100%
Cost of revenues
Software licenses	9.3%	7.9%
Maintenance and support	4.6%	4.8%
Professional services	5%	4.5%
Total cost of revenues	19%	17.2%
Gross profit	81%	82.8%
Operating expenses
Sales and marketing	35%	33.9%
General and administrative	21%	20.1%
Research and development	7.6%	8.3%
Total operating expenses	63.6%	62.3%
Income from operations	17.5%	20.5%
Other income (expenses):
Interest expenses	0	-0.0132%
Interest Income	0.48%	0.27%
Total other income (expense)	0.48%	0.25%
Income before income taxes	17.9%	20.8%
Provision for income taxes	6.1%	6.1%
Net income	11.9%	14.7%
Comprehensive income	11.9%	14.7%
Net income per common share-basic (in Dollar per share)	0.00057%	0.00072%
Net income per common share-diluted (in Dollar per share)	0.00054%	0.00068%
Weighted average shares outstanding:
Basic (in shares)
Diluted (in shares)

Answer 1

Software Licenses:

Total Revenue of the Company comprises 36% Income from the Software Licenses. Whereas it decreased by 3.1% compared to Last Year. But, the Expenses for Revenue has inversely increased compared to the Year 2015 by 1.4%.It can be said that it is adverse to the company compared to the Last Year.

Maintenance & Support:

Total Revenue of the Company comprises 56% Income from the Maintenance & Support. Whereas it increased by 2.3% compared to Last Year 2015. But, the Expenses for Revenue has inversely decreased compared to the Year 2015 by 0.2%.It can be said that it is beneficial to the company compared to the Last Year from the rendering of Maintenance & Support.

Professional Services:

Total Revenue of the Company comprises 8.1 % Income from the Professional Services. Whereas it increased by 0.9% compared to Last Year 2015 and the Expenses for Revenue has increased compared to the Year 2015 by 0.5%.It can be said that it is beneficial to the company compared to the Last Year.

The Total Gross Profit Ratio is 81% for the Year 2016 which has been decreased by 1.8% compared to Year 2015. This decrease is mainly due to the decrease of Revenue from Software Licenses despite the nominal increase in other two types of Services.

There has been a significant increase in the Expenses incurred in "Sales & Marketing", and a slight increase in General & Adminstration and Research & Development Expenses compared to the Last Year 2015.

Interest Income has been increased to 0.47% from 0.2568% last Year.

And the Provisions for Taxes remain the same and there is an overall decrease of profit by 2.8%. This is mainly due to the Decrease in the Income from Second Most Revenue Generating Service. and there is an increase in the Sales & Marketing Expenses. But, it can be said that there may be more revenue next year because the Increased Expenses in Sales & Marketing may have lead to the improved awareness among the wide variety of customers.

At Last, As the Income is decreased, normally, Earnings Per Shares has been decreased compared to the Previous Year.