Common-Size Analyses Meagley Company presents the following condensed income statement and balance sheet information for 2020 anti 2019:
Required:
Next Level Prepare Meagley’s common-size income statements and balance sheets for 2020 and 2019. What trends do your analyses reveal in Meagley’s operations and financial position?
Prepare the common size income statement and balance sheets for the years 2019 and 2020 and explain the trends that reveal Company M’s operational and financial position.
Balance Sheet: Balance Sheet is one of the financial statements which summarize the assets, the liabilities, and the Shareholder’s equity of a company at a given date. It is also known as the statement of financial status of the business.
Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.
Common size financial statements: These are the financial statements in which all the items are expressed as percentages, assuming a base value, to help the intra-comparison of financial data for different years, and inter-comparison of data with other companies.
Prepare the common size income statements for the years 2019 and 2020:
Company M | |||||
Common size Income Statement | |||||
 | 2020 |  | 2019 | ||
Particulars | Amount | % | Â | Amount | % |
Sales | 100,000 | 100 | Â | 90,000 | 100 |
Cost of goods sold | (60,000) | (60) | Â | (51,000) | (56.7) |
Gross profit | 40,000 | 40 | Â | 39,000 | 43.3 |
Operating expenses | (21,300) | (21.3) | Â | (21,900) | (24.3) |
Interest revenue | 1,500 | 1.5 | Â | 1,400 | 1.6 |
Interest expense | (3,700) | (3.7) | (2,500) | (2.8) | |
Income before taxes | 16,500 | 16.5 | Â | 16,000 | 17.8 |
Income tax expense | (5,000) | (5.0) | Â | (4,700) | (5.2) |
Net Income | 11,500 | 11.5 | Â | 11,300 | 12.5 |
Earnings per share | $1.92 | Â | $1.95 | Â |
Table (1)
Prepare the common size balance sheets for the years 2019 and 2020:
Company M | |||||
Common size Balance Sheet | |||||
 | 2020 |  | 2019 | ||
Particulars | Amount | % | Â | Amount | % |
Cash | 3,000 | 2... |
Corporate Financial Accounting
Financial And Managerial Accounting
Financial Accounting
Financial & Managerial Accounting
College Accounting, Chapters 1-27
Managerial Accounting: The Cornerstone of Business Decision-Making
Accounting Information Systems
Brief Principles of Macroeconomics (MindTap Course List)
Accounting Information Systems
Principles of Economics (MindTap Course List)
Fundamentals of Financial Management, Concise Edition (MindTap Course List)
Principles of Microeconomics (MindTap Course List)
MKTG 12:STUDENT ED.-TEXT
ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
Contemporary Marketing
Essentials of Business Communication (MindTap Course List)
Foundations of Business (MindTap Course List)
Essentials of Economics (MindTap Course List)
Principles of Macroeconomics (MindTap Course List)
STATISTICS F/BUSINESS+ECONOMICS-TEXT
Fundamentals of Financial Management (MindTap Course List)
Management, Loose-Leaf Version
Financial & Managerial Accounting
College Accounting (Book Only): A Career Approach
Financial Accounting
College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
Accounting (Text Only)
College Accounting (Book Only): A Career Approach
Principles of Macroeconomics (MindTap Course List)
Statistics for Business & Economics, Revised (MindTap Course List)
Exploring Economics
Fundamentals of Financial Management (MindTap Course List)
Pkg Acc Infor Systems MS VISIO CD
Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)
Corporate Financial Accounting
Survey of Accounting (Accounting I)
PAYROLL ACCT.,2019 ED.(LL)-TEXT
Purchasing and Supply Chain Management
Economics For Today
Economics (MindTap Course List)
Macroeconomics
Cornerstones of Cost Management (Cornerstones Series)
Microeconomics
Practical Management Science