Prepare a common size income statement for the following: BALANCE SHEET 2010 Cas

Question

Prepare a common size income statement for the following:

BALANCE SHEET 2010 Cash & marketable securities $ 500 Accounts receivable 6,000 Inventories 9,500           Current assets $ 16,000 Net property plant & equipment 17,000           Total $ 33,000 Accounts payale $ 7,200 Short-term debt 6,800           Current liabilities $ 14,000 Long-term liabilities 7,000           Total liabilities $ 21,000           Total owners' equity 12,000           Total liabilities and owners' equity $ 33,000 INCOME STATEMENT 2010 Revenues $ 30,000 Cost of goods sold (20,000) Gross profit $ 10,000 Operating expenses (8,000) Net operating income $ 2,000 Interest expense (900) Earnings before taxes $ 1,100 Taxes (400) Net income $ 700

Explanation / Answer

balance sheet comparative analysis common size balance sheet assets amount percentage liabilities amount percentage Cash & marketable securities 500 1.52% Accounts payale 7,200 21.82% Accounts receivable 6,000 18.18% Short-term debt 6,800 20.61% Inventories 9,500 28.79%           Current liabilities 14,000 42.42%           Current assets 16,000 48.48% Long-term liabilities 7,000 21.21% Net property plant & equipment 17,000 51.52%           Total liabilities 21,000 63.64% Total owners' equity 12,000 36.36%           Total 33,000 100.00%           Total liabilities and owners' equity 33,000 100.00% income statement common size income statement amount percentage Revenues 30,000 100.00% Cost of goods sold -20,000 -66.67% Gross profit 10,000 33.33% Operating expenses -8,000 -26.67% Net operating income 2,000 6.67% Interest expense -900 -3.00% Earnings before taxes 1,100 3.67% Taxes -400 -1.33% Net income 700 2.33%

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