Purpose: Prepare common- size statements and demonstrate applying concepts.

The COMMON- SIZE INCOME STATEMENT compares all amounts within one year to revenue of that same year. The analysis measures each income statement amount as a percentage of revenue.

Q1 Prepare the common- size statements for the Coca- Cola ( KO) and the Starbucks ( SBUX) companies listed below. To compute, divide each amount on the income statement by sales revenue. Record the resulting common- size percent in the shaded area provided.

2010	Pepsico (PEP)		COCA-COLA (KO)		STARBUCKS (SBUCKS)
($ in millions)	Amount	%	Amount	%	Amount	%
Sales Revenues	$57,838	100	$35,000		$10,707
Total Expenses	$51.52	89	$23,310		$9,761
Net Income	$6,320	11	$11,809		$946

Q2 ( PEP / KO / SBUX) is the largest company above, reporting sales revenue of approximately $ 57.8

( trillion / billion / million / thousand). ROS for PepsiCo is __________% or ___._______ in decimal form, which indicates __________ cents of every dollar of sales revenue resulted in profit.

ROS = NI / Revenue

Q3 On the common- size income statement, every amount is compared to or divided by total ( assets / liabilities / sales revenue / net income).

Q4 Common- size statements are helpful when comparing companies of different size. ( True / False)

Q5 Based only on the information provided above, which company would be your choice of investment? ( PEP / KO / SBUX)

Why?