Kellogg Company (K) produces, markets, and distributes cereal and food products including Cheez-It, Coco Pops, Rice Krispies, and Pringles. The following partial income statements (in millions) were adapted from recent financial statements.

1. Prepare common-sized income statements for Years 1 and 2. Round to one decimal place.

2. Using your answer to (1), analyze the performance of Kellogg in Year 2.

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Year 1 Year 2 Sales .. $13,014 $12,923 Cost of goods sold Gross profit .. Selling and administrative expenses.. Operating income ... (7,901) $ 5,022 (8,259) $ 4,755 (3,360) $ 1,395 (3,076) $ 1,946