Prepare a comparative common-size income statement for Enchanted Co EE (Click th

Question

Prepare a comparative common-size income statement for Enchanted Co EE (Click the icon to view the comparative income statement.) rporation. To an investor, how does 2017 compare with 2016? Explain r reasonin Data Table Start by calculating the percentages. (Round the percentages to two decimal places Enchanted Corporation Comparative Common-Size Income Statement For the Years Ended December 31, 2017 and 2016 Enchanted Corporation Income Statement For the Years Ended December 31, 2017 and 2016 2017 2016 (amounts in thousands) Sales revenues Less: Cost of goods sold Gross profit Less: Operating expenses Operating income Less: Interest expense Income before income taxes Less: Income tax expense Net income 100.00 % 100.00 % 2017 2016 Sales revenues Less: Cost of goods sold Gross profit Less: Operating expenses Operating income Less: Interest expense Income before income taxes Less: Income tax expense Net income S 465,550 $ 404,000 205,000 $ 243,740 $ 199,000 102,055 135,965 $ 96,945 8,040 221,810 107,775 11,546 124,419 S 18,902 105,517 $ 13,980 74,925

Explanation / Answer

Enchanted Corporation Comparative Common Size statement For the Years Ended December 31 , 2017 & 2016 2017 2016 Sales revenues 100 % 100 % Less : Cost of Goods Sold 221,810 / 465,550 = 47.64 % 205,000 / 404,000 = 50.74 % Gross Profit 243,740 / 465,550 = 52.36 % 199,000 / 404,000 = 49.26 % Less : Operating Expenses 107,775 / 465,550 = 23.15 % 102,055 / 404,000 = 25.26% Operating income 135,965 / 465,550 = 29.21 % 96,945 / 404,000 = 24.00 % Less : Interest expense 11,546 / 465,550 = 2.48% 8,040/ 404,000 = 1.99 % Income before income tax 124,419 / 465,550 = 26.73 % 88,905/ 404,000 = 22.01 % Less : Income tax expense 18,902 / 465,550 = 4.06 % 13,980 / 404,000 = 3.46 % Net income 105,517 / 465,550 =22.67 % 74,925 / 404,000 = 18.55 %

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