Carla Vista Burgers operates and franchises fast-food restaurants specializing i

Question

Carla Vista Burgers operates and franchises fast-food restaurants specializing in grilled hamburgers and chicken sandwiches. The 2015 and 2016 income statements are as follows (in $000s): Year Ended December 31, 2016 December 31, 2015 Total revenues $41,021 $40,513 Expenses Cost of restaurant sales 11,142 11,066 Restaurant operating expenses 16,917 16,739 General and administrative 6,820 5,300 Advertising 2,561 2,662 Depreciation and amortization 2,235 2,122 Impairment of long-lived assets 989 0 Total expenses 40,664 37,889 Operating income $357 $2,624 (a) Prepare a common-size analysis of this section of Carla Vista Burgers’ income statement. Your answers may not add perfectly due to rounding. (Round answers to 1 decimal place, e.g. 50.2%.)

2016 2015 Total Revenues

%

% Expenses   Cost of restaurant sales

%

%   Restaurant operating expenses

%

%   General and administrative

%

%   Advertising

%

%   Depreciation and amortization

%

%   Impairment of long-lived assets

%

% Total expenses

%

% Operating income

%

%

Explanation / Answer

2016 2015 Total Revenues 100% 100% expense   Cost of restaurant sales 11142/41021=27.2% 11066/40513= 27.3% Restaurant operating expense 41.2% 16739/40513=41.3% General and administrative 16.6% 5300/40513=13.1% Advertising 6.2% 2662/40513=6.6% Depreciation and amortization 5.4% 2122/40513=5.2%   Impairment of long-lived asset 2.4% 0 Total expenses 99.1% 37889/40513=93.5% Operating income .9% 2624/40513= 6.5%

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