Question

Fill in the missing numbers on the following annual income statements for Baron Pizza, Inc., Note: Use tax rate of 37.5%

Barron Pizza, Inc. Abbreviated Income Statements for the Years Ending 2012-2014 ($ in thousands, except earnings per share) Year Ending Year Ending Year Ending 2014 2013 2012 Account Revenue $ 917,210 $ 946,154 -669,263 $ $ -656,157 $ $ 314,900 169,351 -70,587 $ Cost of goods sold Gross profit Selling, general, and administrative expenses $ Research and development Depreciation Operating income $ -192,911 -3,549 $ -5,411 $ -7,052 $ -34,445 $ $ -35,770 60,468 $ 81,413 Other income $ 603 $ 2,100 EBIT $ 82,420 $ 84,770 Interest expense $ -6,849 $ -8,745 Income before tax $ 74,825 $ 76,025 Taxes $ -20,333 $ -28,059 Net income $ 46,766 $ 47,516 16,737,000 Shares outstanding Earnings per share 16,737,000 2.02 $ 2.79

Answer 1

Net Income =Revenue -COGS =Gross Profit -Selling and General Administrative expense Less research and Development Less Depreciation=Operating income +Other Income =EBIT Less Interest Less Tax we arrive at Net Income

Answers can be found by shuffling the above formula around

The negative sign indicates expenses.When computing this can be ignored.

Net income /Number of shares outstanding=EPS(Earnings per Share)

For 2014

COGS=Revenue-Gross Profit=747859 that's -747859 (917210-169351) the negative value is given to indicate it's an expense.

Gross Profit-Selling and Gen Admin Expense Less R&D Less depreciation =operating Income

To find Depreciation

The formula becomes Gross Profit-Selling and Gen Admin Expense Less R&D -operating income

We get depreciation as -32885 (169351-70587-5411-60468) the negative sign is added to the value to indicate it's an expense.

EBIT =Operating income+Other Income That's $60468+$603=$61071

Income Before tax =$61071-$6849=$54,222

Net Income =$54222-$20333 =$33889

For 2013

Gross Profit=Sales -COGS That's $946157-669263=276891

Selling and General Administrative Expenses=Gross Profit Less R&D Less Depreciation-operating income We get $153981 that's -$153981

Other Income =EBIT- Operating income=$82420-81413=$1007

Interest expense=$74825-82420=-7595

Share outstanding=Net Income/EPS*1000

=$46766/2.79*1000=16762007

For 2012

Revenue=COGS+Gross Profit

656157+314900=$971057

Operating income =Gross Profit-Selling and Gen Admin Expense Less R&D Less depreciation

$314900-192911-3549-35770=82670

Taxes=$76025*37.5%=$28509

EPS(Earnings per share)=Net Income/Shares Outstanding=$47516/16737000=2.838957 that's 2.84(rounded)