INTRO MGRL ACCT LL W CONNECT
8th Edition
ISBN: 9781266376771
Author: BREWER
Publisher: MCG
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Textbook Question
Chapter 14, Problem 1E
Common-Size Income Statement
A comparative income statement is given below for McKenzie Sales. Ltd., of Toronto:
Members of the company's board of directors are surprised to see that net income increased by only $38,000 when sales increased by $2,000,000.
Required:
1. Express each year's income statement in common-size percentages. Carry computations to one decimal place.
2. Comment briefly on the changes between the two years.
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Prepare a comparative common-size income statement for Jubilee Corporation. To an investor, how does the current year compare with the prior year? Explain your reasoning.
E (Click the icon to view the comparative income statement.)
Data table
Start by calculating the percentages. (Round the percentages to two decimal places, X.XX.)
Jubilee Corporation
Comparative Common-Size Income Statement
A
C
For the Years Ended December 31
1
Jubilee Corporation
Current
2
Income Statement
year
Prior year
3
For the Years Ended December 31
Sales revenues
100.00 %
100.00 %
4
(amounts in thousands)
Less: Cost of goods sold
%
%
Current
Gross profit
%
%
year
Prior year
Less: Operating expenses
%
6 Sales revenues
$
494,208 $
429,000
%
Operating income
%
7 Less: Cost of goods sold
172,640
160,000
Less: Interest expense
8 Gross profit
2$
321,568 $
269,000
0%
Income before income taxes
%
%
9 Less: Operating expenses
143,370
135,000
Less: Income tax expense
10 Operating income
2$
178,198 $
134,000
%
%
11 Less:…
Horizontal Analysis of Income Statement
For 20Y2, McDade Company reported a decline in net income. At the end of the year, T. Burrows, the president, is presented with the following
condensed comparative income statement:
McDade Company
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
20Υ2
20Υ1
Sales
$829,639
$693,000
Cost of merchandise sold
616,000
440,000
Gross profit
$213,639
$253,000
Selling expenses
$87,000
$58,000
Administrative expenses
50,320
37,000
Total operating expenses
$137,320
$95,000
Income from operations
$76,319
$158,000
Other revenue
3,634
2,900
Income before income tax expense
$79,953
$160,900
Income tax expense
22,400
48,300
Net income
$57,553
$112,600
Required:
Chapter 14 Solutions
INTRO MGRL ACCT LL W CONNECT
Ch. 14 - Prob. 1QCh. 14 - What is the basic purpose for examining trends in...Ch. 14 - Prob. 3QCh. 14 - Prob. 4QCh. 14 - What is meant by the dividend yield on a common...Ch. 14 - What is meant by the term financial leverage?Ch. 14 - Prob. 7QCh. 14 - Prob. 8QCh. 14 - Prob. 9QCh. 14 - Markus Company’s common stock sold for $2.75 per...
Ch. 14 - Markus Company’s common stock sold for $2.75 per...Ch. 14 - Markus Company’s common stock sold for $2.75 per...Ch. 14 - Markus Company’s common stock sold for $2.75 per...Ch. 14 - Markus Company’s common stock sold for $2.75 per...Ch. 14 - Markus Company’s common stock sold for $2.75 per...Ch. 14 - Markus Company’s common stock sold for $2.75 per...Ch. 14 - Markus Company’s common stock sold for $2.75 per...Ch. 14 - Markus Company’s common stock sold for $2.75 per...Ch. 14 - Markus Company’s common stock sold for $2.75 per...Ch. 14 - Prob. 11F15Ch. 14 - Prob. 12F15Ch. 14 - Prob. 13F15Ch. 14 - Prob. 14F15Ch. 14 - Prob. 15F15Ch. 14 - Common-Size Income Statement A comparative income...Ch. 14 - Prob. 2ECh. 14 - Prob. 3ECh. 14 - Financial Ratios for Debt Management Refer to the...Ch. 14 - Prob. 5ECh. 14 - Prob. 6ECh. 14 - Prob. 7ECh. 14 - Prob. 8ECh. 14 - Financial Ratios for Assessing Profitability and...Ch. 14 - Prob. 10ECh. 14 - Prob. 11ECh. 14 - Selected Financial Measures for Assessing...Ch. 14 - Effects of Transactions on Various Financial...Ch. 14 - Effects of Transactions on Various Ratios Denna...Ch. 14 - Prob. 15PCh. 14 - Common-Size Financial StatementsRefer to the...Ch. 14 - Interpretation of Financial Ratios Pecunious...Ch. 14 - Common-Size Statements and Financial Ratios for a...Ch. 14 - Financial Ratios for Assessing Profitability and...
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- Revenue and expense data for Gresham Inc. for two recent years are as follows: a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. Round to one decimal place. b. Comment on the significant changes disclosed by the comparative income statement.arrow_forwardCuneo Companys income statements for the last 3 years are as follows: Refer to the information for Cuneo Company above. Required: 1. Prepare a common-size income statement for Year 1 by expressing each line item as a percentage of sales revenue. (Note: Round percentages to the nearest tenth of a percent.) 2. Prepare a common-size income statement for Year 2 by expressing each line item as a percentage of sales revenue. (Note: Round percentages to the nearest tenth of a percent.) 3. Prepare a common-size income statement for Year 3 by expressing each line item as a percentage of sales revenue. (Note: Round percentages to the nearest tenth of a percent.)arrow_forwardSundahl Companys income statements for the past 2 years are as follows: Refer to the information for Sundahl Company above. Required: 1. Prepare a common-size income statement for Year 1 by expressing each line item as a percentage of sales revenue. (Note: Round percentages to the nearest tenth of a percent.) 2. Prepare a common-size income statement for Year 2 by expressing each line item as a percentage of sales revenue. (Note: Round percentages to the nearest tenth of a percent.)arrow_forward
- Cuneo Companys income statements for the last 3 years are as follows: Refer to the information for Cuneo Company above. Required: 1. Prepare a common-size income statement for Year 2 by expressing each line item for Year 2 as a percentage of that same line item from Year 1. (Note: Round percentages to the nearest tenth of a percent.) 2. Prepare a common-size income statement for Year 3 by expressing each line item for Year 3 as a percentage of that same line item from Year 1. (Note: Round percentages to the nearest tenth of a percent.)arrow_forwardScherer Company provided the following income statements for its first 3 years of operation: Refer to the information for Scherer Company on the previous page. Required: Prepare common-size income statements by using net sales as the base. (Note: Round answers to the nearest whole percentage.)arrow_forwardSundahl Companys income statements for the past 2 years are as follows: Refer to the information for Sundahl Company above. Required: Prepare a common-size income statement for Year 2 by expressing each line item for Year 2 as a percentage of that same line item from Year 1. (Note: Round percentages to the nearest tenth of a percent.)arrow_forward
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