Common-size statement analysisA common-size income statement for Creek Enterprises'

2018

operations follows

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.

Using the firm's

2019

income statement

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,

develop the

2019

common-size income statement and compare it to the

2018statement.

Which areas require further analysis and investigation?

Complete the common-size income statement for the year ending December 31,

2019

and compare it to the common-size income statement for the year ending December

2018:

(Round to one decimal place.)

Creek Enterprises
Common-Size Income Statement
for the Years Ended December 31, 2018 and December 2019
	2019				2018
Sales revenue			100.0	%			100.0	%
Less: Cost of goods sold			70.0				65.5
Gross profits			30.0	%			34.5	%
Less: Operating expenses
Selling expense		%			12.6	%
General and administrative expenses					6.2
Lease expense					0.4
Depreciation expense					3.6
Total operating expense							22.8
Operating profits				%			11.7	%
Less: Interest expense							1.3
Net profits before taxes				%			10.4	%
Less: Taxes (rate = 40%)							4.2
Net profits after taxes				%			6.2	%
Less: Preferred stock dividends							0.2
Earnings available for common stockholders				%			6.0	%

TABLES Creek Enterprises Income Statement for the Year Ended December 31, 2018 Sales revenue ($34,964,000) 100.0 % Less: Cost of goods sold 65.5 Gross profits 34.5 % Less: Operating expenses Selling expense 12.6 % General and administrative expenses 6.2 Lease expense 0.4 Depreciation expense 3.6 Total operating expense 22.8 Operating profits 11.7 % Less: Interest expense 1.3 Net profits before taxes 10.4 % Less: Taxes (rate=40%) 4.2 Net profits after taxes 6.2 % Less: Preferred stock dividends 0.2 Earnings available for common stockholders 6.0 %

Creek Enterprises Income Statement for the Year Ended December 31, 2019 Sales revenue $30,034,000 Less: Cost of goods sold 21,018,000 Gross profits $9,016,000 Less: Operating expenses Selling expense $2,967,000 General and administrative expenses 1,796,000 Lease expense 193,000 Depreciation expense 1,002,000 Total operating expense 5,958,000 Operating profits $3,058,000 Less: Interest expense 954,000 Net profits before taxes $2,104,000 Less: Taxes (rate=40%) 841,600 Net profits after taxes $1,262,400 Less: Preferred stock dividends 131,000 Earnings available for common stockholders $1,131,400