i have to read these following income statements and write a paragraph on it. ($
ID: 2579625 • Letter: I
Question
i have to read these following income statements and write a paragraph on it.
($ in millions)
Sales Revenue
Cost of Goods Sold
Gross Profit
Operating Expenses
Operating Income
Nonoperating revenues and expenses
Income before Income tax
Provision for Income tax
Income from continuing operations
Nonrecurring items
NET INCOME
Earnings per share
($ in millions)
Sales Revenue
Cost of Goods Sold
Gross Profit
Operating Expenses
Operating Income
Nonoperating revenues and expenses
Income before Income tax
Provision for Income tax
Income from continuing operations
Nonrecurring items
NET INCOME
Earnings per share
($ in millions)
Sales Revenue
Cost of Goods Sold
Gross Profit
Operating Expenses
Operating Income
Nonoperating revenues and expenses
Income before Income tax
Provision for Income tax
Income from continuing operations
Nonrecurring items
NET INCOME
Earnings per share
Your Company Name here CONDENSED MULTISTEP INCOME STATEMENT Date Most recent year Year Year($ in millions)
12/31/16 12/31/15 12/31/14Sales Revenue
41,490,000.00 39,678,000.00 36,918,000.00Cost of Goods Sold
6,933,000.00 6,638,000.00 6,262,000.00Gross Profit
34,557,000.00 33,040,000.00 30,656,000.00Operating Expenses
28,359,000.00 27,075,000.00 25,091,000.00Operating Income
6,198,000.00 5,965,000.00 5,565,000.00Nonoperating revenues and expenses
1,388,000.00 1,388,000.00 1,388,000.00Income before Income tax
4,810,000.00 4,577,000.00 4,177,000.00Provision for Income tax
1,378,000.00 1,261,000.00 1,108,000.00Income from continuing operations
3,432,000.00 3,316,000.00 3,069,000.00Nonrecurring items
542,000.00 1,187,000.00 1,194,000.00NET INCOME
2,890,000.00 2,129,000.00 1,875,000.00Earnings per share
7.3 4.99 4.16 Your Company Name here CONDENSED TREND ANALYSIS INCOME STATEMENT Date Most recent year Year Year($ in millions)
2016 2015 2014Sales Revenue
112.38% 107.48% 100.00%Cost of Goods Sold
110.72% 106.00% 100.00%Gross Profit
112.73% 107.78% 100.00%Operating Expenses
113.02% 107.91% 100.00%Operating Income
111.37% 107.19% 100.00%Nonoperating revenues and expenses
100.00% 100.00% 100.00%Income before Income tax
115.15% 109.58% 100.00%Provision for Income tax
124.37% 113.81% 100.00%Income from continuing operations
111.83% 108.05% 100.00%Nonrecurring items
45.39% 99.41% 100.00%NET INCOME
154.13% 113.55% 100.00%Earnings per share
175.48% 119.95% 100.00% Your Company Name here CONDENSED COMMON SIZE INCOME STATEMENT Date Most recent year Year Year($ in millions)
2016 2015 2014Sales Revenue
100.00% 100.00% 100.00%Cost of Goods Sold
16.71% 16.73% 16.96%Gross Profit
83.29% 83.27% 83.04%Operating Expenses
68.35% 68.24% 67.96%Operating Income
14.94% 15.03% 15.07%Nonoperating revenues and expenses
3.35% 3.50% 3.76%Income before Income tax
11.59% 11.54% 11.31%Provision for Income tax
3.32% 3.18% 3.00%Income from continuing operations
8.27% 8.36% 8.31%Nonrecurring items
1.31% 2.99% 3.23%NET INCOME
6.97% 5.37% 5.08%Earnings per share
0.00% 0.00% 0.00%Explanation / Answer
The company has a very stable operation as evident from the stable Gross profit and operating profit.
The Gross profit ratio (which is the % of Gross profit to Sales) is 83.29% in 2016, having marginally increased from 83.04% in 2014.
The operating expenses as percentage of sales are also consistent, which resulted in operating income of 14.94% (close to 15%) on sales. However, as against the marginal increase in Gross profit percentage in 2016, the operating income as a percentage of sales, has marginally reduced from 15.07% (5565000/36918000*100) in 2014 to 14.94%. This could be due to marginal increase in operating expenses. Hence, the advantage gained from trading benefits is offset by the increase in operating expenses.
There was significant reduction in Non recurring expenses in 2016, compared to the previous years. As a result, a sharp increase in Net income is observed in 2016. Net income after tax as a % of sales in 2016 is 7%, as against 5.1% in 2014. This increased bottom line has resulted in increase in EPS by 75% ((7.3-4.16)/4.16*100=75%).
The Trend analysis statement shows the trend of various items by keeping a base year, which is 2014. Similarly, in common size statement, all items of income and expenses are presented as a % of sales. All the above analysis, can be inferred from the Trend analysis statement and common size statement.
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