Question

A common size income statement analysis would show what figure for the following company: 2020 2019...

A common size income statement analysis would show what figure for the following company:


2020
2019
Net sales $678,500 $630,485
Cost of goods sold $195,000 $186,405
Gross margin $483,500 $444,080
Selling/administrative costs $115,000 $128,350
Operating income $368,500 $315,730
Income tax expense $73,700 $63,146
Net income $294,800 $252,584

A. 2020 operating income (as a percent of net sales) is 54.3%

B. The change in gross margin is $39,420

C. The 2020 change in operating income is $52,770

D. The percent change in net income is 16.7%

Homework Answers

Answer #1
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Particulars 2020 2019
Net sales 678,500.00 630,485.00
Cost of goods sold 195,000.00 186,405.00
Gross margin 483,500.00 444,080.00
Selling/administrative costs 115,000.00 128,350.00
Operating income 368,500.00 315,730.00
Income tax expense     73,700.00     63,146.00
Net income 294,800.00 252,584.00
Common sized income statement means all the items of the income statements are based as a % of sales. So correct answer is option A. Operating income as % of sales is 54.30%.
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