Refer to the annual report of Colgate in Appendix A at the back of this book.

a. Compute all of the expense categories as a percentage of sales for each of the three years shown. Analyze and comment on the percentages computed.
b. Comment on the extent to which each component in (a) is expected to persist into future years.
c. The provision for income taxes makes up what percent of earnings before income taxes? What factors might cause this percentage to deviate from the statutory percentage of 35%?
d. As part of supplemental income statement information, Colgate reports the total expense related to research and development (R&D) and advertising in 2010 and 2011. What is the amount recorded relating to these expenses in 2010 and 2011? To what activities do these expenses relate? How do you interpret these expenses?
e. How might Colgate use expenses such as R&D and advertising to manage earnings?

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