Part A: SPYRES MANUFACTURING COMPANY Comparative CommonSize Income Statements Ye

Question

Part A:

SPYRES MANUFACTURING COMPANY

Comparative CommonSize Income Statements

Year Ended December 31         Increase

Year 9 Year 8                          (Decrease)

Net sales.......................... 100% 100% 20%

Cost of goods sold.............. 81.7 86.0 (14.0)

Gross margin on sales........ 18.3 14.0 57.1

Operating expenses........... 16.8 10.2 98.0

Income before taxes........... 1.5 3.8 (52.6)

Income taxes..................... 0.4 1.0 (52.0)

Net income........................ 1.1 2.8 (52.9)

Part B:

Interpret the trend using the percentage calculations from Part A, above. What areas identified from this analysis should be a matter of managerial concern?

Explanation / Answer

Part A: SPYRES MANUFACTURING COMPANY Comparative CommonSize Income Statements Ye

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