6. Using your 2015/2016 Income Statement and Balance Sheet, add a column for per
ID: 2740241 • Letter: 6
Question
6. Using your 2015/2016 Income Statement and Balance Sheet, add a column for percentage of total. Compute the percentages for each line item for the financial statements. For the 2015 Income Statement, what is the percentage of COGS as compared to total sales? Is this figure reasonable and what is COGS and why is it important to a company?
ICS Manufacturing Company
Income Statement for 2015
Sales Revenue $35,500,000
Cost of Goods Sold 12,725,000
Selling, General & Admin Exp 11,200,000
Depreciation Expense 3,200,000
EBIT 8,375,000
Interest Expense 350,000
Taxable Income 8,025,000
Taxes 3,210,000
Net Income 4,815,000
ICS Manufacturing Company
Balance Sheet for year ending December 31, 2015
Assets Liabilities
Cash $2,625,000 Accounts Payable $5,825,000
Accounts Receivable $2,715,000 Other Current Liabilities $3,365,000
Inventories $1,514,000 Total Current Liabilities $9,190,000
Total Current Assets $6,854,000
Long Term Assets Long Term Liabilities
P, P & E $12,745,000 Long Term Debt $1,225,000 Goodwill $1,205,000 Other LT Debt $2,230,000
Intangible Assets $5,275,000 Total LT Liabilities $3,455,000
Total LT Assets $19,225,000 Total Liabilities $12,645,000
Total Assets $26,079,000
Owners’ Equity
Common Stock $6,425,000
Retained Earnings $7,009,000
Total Owners’ Equity $13,434,000
Total Liab/OE $26,079,000
Explanation / Answer
ICS manufacturing company
Income Statement
Amount
Percentage
Sales
35500000
100%
Cost of goods sold
12725000
36%
selling, General & Admin Exp
11200000
32%
Depreciation
3200000
9%
EBIT
8375000
24%
Interest Expense
350000
1%
EBT
8025000
23%
Taxes
3210000
9%
Net income
4815000
14%
ICS manufacturing company
Balance Sheet
Amount
Percentage
Cash
2625000
10%
Accounts receivable
2715000
10%
Inventories
1514000
6%
Total Current Assets
6854000
26%
Long term Assets:
P,P&E
12745000
49%
Goodwill
1205000
5%
Intangible Assets
5275000
20%
Total Long term Assets
19225000
74%
Total Assets
26079000
100%
Liabilities:
Accounts payable
5825000
22%
Other current liabilities
3365000
13%
Total current liabilities
9190000
35%
Long term Liabilities:
Long term Debt
1225000
5%
Other LT debt
2230000
9%
total LT liabilities
3455000
13%
Total Liabilities
12645000
48%
Owners equity
Common stock
6425000
25%
Retained earnings
7009000
27%
Total Liabilities & equity
26079000
100%
Cost of goods sold to total sales is 36%, and it is reasonable, and cost of goods sold is expenses incurred for manufacturing a particular product, that is all cost incurred in producing a particular product, that is both direct and indirect cost.
Cost of goods sold to sales percentage is always important for a company, cost of goods sold decreases, there is considerable increase in gross profit percentage, if there is efficiency in the manufacturing, then there is considerable decrease in costs, hence it leads to increase in gross profit.
ICS manufacturing company
Income Statement
Amount
Percentage
Sales
35500000
100%
Cost of goods sold
12725000
36%
selling, General & Admin Exp
11200000
32%
Depreciation
3200000
9%
EBIT
8375000
24%
Interest Expense
350000
1%
EBT
8025000
23%
Taxes
3210000
9%
Net income
4815000
14%
ICS manufacturing company
Balance Sheet
Amount
Percentage
Cash
2625000
10%
Accounts receivable
2715000
10%
Inventories
1514000
6%
Total Current Assets
6854000
26%
Long term Assets:
P,P&E
12745000
49%
Goodwill
1205000
5%
Intangible Assets
5275000
20%
Total Long term Assets
19225000
74%
Total Assets
26079000
100%
Liabilities:
Accounts payable
5825000
22%
Other current liabilities
3365000
13%
Total current liabilities
9190000
35%
Long term Liabilities:
Long term Debt
1225000
5%
Other LT debt
2230000
9%
total LT liabilities
3455000
13%
Total Liabilities
12645000
48%
Owners equity
Common stock
6425000
25%
Retained earnings
7009000
27%
Total Liabilities & equity
26079000
100%
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