Operations for Janelle Company for 2011 and 2012 are summarized below.

Required:
1. Prepare common-size income statements for 2012 and 2011.
2. What caused Janelle's profitability to decline so dramatically in2012?

2012 2011 Net sales Cost of goods sold Gross profit on sales Selling and general expenses Operating income. Interest expense Income (loss) before income tax. Income tax (refund) Net income (loss) $600,000 $560,000 S170,000 130,000 $ 40,000 $260,000 150,000 Si110,000 $ 65,000 $ (10,000) 20,000 $ 45,000 $ 17,000)