1. Prepare the common-size financial statement for the entities below.

2. Give reasons to determine which of the two entities above is performing better with reference to the benefits of common-sized financial statements relative to ratios when used to compare performance and establish trends.

Income statements for the year ending 31 December 2019

Gees Baking Co. ltd 9west com.

$’000 $’000

Net revenue 35,119 30,990

Cost of goods sold 12,693 11,088

Gross profit 22,426 19,902

Selling & administrative expenses 13,158 11,358

Other operating expenses 819 313

Operating income 8,449 8,231

Interest income 833 355

Other income (net of expenses) 6,447 988

Profits before tax 14,193 8,864

Income tax expense 2,384 2,040

Profits after taxes 11,809 6,824

Answer rating: 100% (QA)

1 Common size financial statement for Ge es B aking Co Ltd and 9 west com G ees B aking Co Ltd 9 wes... View the full answer