Question

Sheridan 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 Total revenues December 31, 2016 $41,301 December 31, 2015 $40,493 Expenses Cost of restaurant sales 11,078 Restaurant operating expenses 16,734 General and administrative 5.284 Advertising 2,664 Depreciation and amortization 2,122 Impairment of long-lived assets 0 Total expenses 37.882 Operating income $651 $2.611 Prepare a common-size analysis of this section of Sheridan Burgers' income statement. Your answers may not add perfectly due to rounding. (Round answers to 1 decimal place,eg. 50.2%) 2016 2015 0 7 :39

Answer 1

Common size analysis of income statement:
	year ended Dec 31 2016		year ended Dec 31 2015
	Amount $	Percentage	Amount $	Percentage
Total revenues	41301	100%	40493	100%
Expenses:
cost of restaurant sales	11138	26.97	11078	27.36
Restaurant operating expenses	16906	40.93	16734	41.33
General and Administrative	6831	16.54	5284	13.05
Advertising	2553	6.18	2664	6.58
Depreciation and amortisation	2227	5.39	2122	5.24
Impairment of long-lived assets	995	2.41	0	0.00
Total expenses	40650	98.42	37882	93.55
Operating income	651	1.58	2611	6.45
Analysis:
1) Increase in the G&A expenses in 2016 by around 3.5%.
2) Impairment of long lived assets is additional expenses to 2015.
3) Above increase in expenses has resulted in reduction in operating income by around 5%.