A common-size income statement for Creek Enterprises€™ 2011 operations follows. Using the firm€™s 2012 income statement presented in Problem 3€“18, develop the 2012 common-size income statement and compare it to the 2011 statement. Which areas require further analysis andinvestigation?

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Creek Enterprises Common-Size Income Statement for the Year Ended December 31, 2011 Sales revenue ($35,000,000) Less: Cost of goods sold 100.0% 65.9 -34.1 % Gross profits Less: Operating expenses Selling expense General and administrative expenses Lease expense 12.7% 6.3 0.6 3.6 Total operating expense 23.2 Operating profits Net profits before taxes Net profits after taxes Earnings available for common stockholders 5.5% 10.9% Less: Interest expense Less: Taxes (rate = 40%) Less: Preferred stock dividends 9.4% 5.6% 0.1