Income statements are presented in the table below for the Elf Corporation for t

Question

Income statements are presented in the table below for the Elf Corporation for the years ending December 31, 2010, 2009, and 2008. Write a one-paragraph analysis of Elf Corporation’s profit performance for the period. Create a common-sized income statement for the three years. What conclusions can you draw from the different parts of the statement? What are the causes and effects of Elf's performance for those three years?

    
Elf Corporation Income Statements for the Years Ending December 31

(in millions) 2010 2009 2008 Sales $700 $650 $550 Cost of goods sold 350 325 275 Gross profit 350 325 275 Operating Expenses: Administrative 100 100 100 Advertising and marketing     50     75     75 Operating profit $200 $150 $100 Interest expense     70     50    30 Earnings before tax $130 $100 $ 70 Tax expense (50%)    65   50    35 Net income $   65 $ 50 $   35

Explanation / Answer

Income statements are presented in the table below for the Elf Corporation for t

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