P3–20 Common-size statement analysis A common-size income statement for Creek Enterprises’

2014 operations follows. Using the firm’s 2015 income statement presented in Problem 3–18, develop the 2015 common-size income statement and compare it with the 2014 statement. Which areas require further analysis and investigation?

Creek Enterprises Common-Size Income Statement for the Year Ended December 31, 2014 Sales revenue ($35,000,000) Less: Cost of goods sold 100.0% 65.9 34.1% 12.7% 6.3 5.6% 12 Gross profits Less: Operating expenses Selling expense General and administrative expenses Lease expense Depreciation expense Total operating expense Operating profits Less: Interest expense Net profits before taxes Less: Taxes (rate = 40%) Net profits after taxes Less: Preferred stock dividends Earnings available for common stockholders