Income statement Analysis - Accounts Financial Statement Analysis

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Income statement Analysis - Accounts Financial Statement Analysis Powered By Docstoc
					              Sub: Accounts                                          Topic: Analysis of financial statements



              Question:
              Analysis of financial statement using horizontal analysis

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              Common-size statement analysis

              A common-size income statement for Creek Enterprises’ 2005 operations follows. Using the
              firm’s 2006 income statement presented in Problem 2–12, develop the 2006 common-size
              income statement and compare it to the 2005 statement. Which areas require further analysis
              and investigation?

                                                     Creek Enterprises
                             Common-Size Income Statement for the Year Ended December 31, 2005

                    Sales revenue ($35,000,000)                                                                    100.0%

                    Less: Cost of goods sold                                                                        65.9




                    Gross profits                                                                                  34.1%

                    Less: Operating expenses

                                                       
				
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Description: Analysis and investigation of income statement : A common-size income statement for Creek Enterprises’ 2005 operations follows. Using the firm’s 2006 income statement presented in Problem 2-12, develop the 2006 common-size income statement and compare it to the 2005 statement. Which areas require further analysis and investigation?
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