Question

Answer and analyze this question. Analyze the common size income statements below for Coast Company: (in...

Answer and analyze this question.

Analyze the common size income statements below for Coast Company:

(in percent)

2015

2014

Net sales

100

100

COGS

62

65

      Gross margin

38

  35

Research and development

       9

       5

Selling, general and administrative

    11

     17

Restructuring, asset impairments and other charges

    1

   8

       Income/(loss) from operations

     17

5

Interest expense

(3)

(1)

     Income/(loss) before taxes

14

4

Provision for/(benefit from) income taxes

   4

1

     Net income/(loss)

10   

   3
Business   Accounting   
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Answer #1
2015 2014
Sales 100 100.00% 100 100.00%
COGS 62 62.00% 65 65.00%
Gross Margin 38 38.00% 35 35.00%
Research and development 9 9.00% 5 5.00%
Selling, general and administrative 11 11.00% 17 17.00%
Restructuring, asset impairments and other charges 1 1.00% 8 8.00%
Income/(loss) from operations 17 17.00% 5 5.00%
Interest expense -3 -3.00% -1 -1.00%
Income/(loss) before taxes 14 14.00% 4 4.00%
Provision for/(benefit from) income taxes 4 4.00% 1 1.00%
Net income/(loss) 10 10.00% 3 3.00%
Reason for declining the profit are:
1. Sales have declined and cost of goods sold has increased as a percentage of sales
due to the reason of productive efficiency
2. Further analysis should be directed at the increased cost of goods sold and the high debt level
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