174 s and assess whether or not Commonsize percent computati

17-4 s and assess whether or not Common-size percent computation and interpretation P2 this company\'s situation has improved in the most recent year (round the percents to one decimal) 0 Comparative Income Statements For Years Ended December 31, 2017 and 2016 2017 2016 Sales Cost of goods sold Gross profit Operating expenses128.200 Net income 560.300 290.800 179.700 334.200 218,500 $51,500 $115.700

Solution

Percent = Amount / Sales * 100

Example

COGS to Sales percent = COGS / Sales * 100

= (560,300 / 740,000) * 100

= 75.7%

Company COGS is 46.5% of sales in 2016 but in 2017 it increased to 75.7% which is not good for business, so company needs to keep a check on it.

Company Gross profit is 53.5% of sales in 2016 but in 2017 it came down to 24.3%, which is not good from Stockholder\'s point of view, so company needs to take some steps to increase it.

Company Operating Expenses is 35% of Sales in 2016 whereas in 2017 it is 17.3% It shows company has taken some solid steps to decrease the operating expenses, this is good from Stockholder\'s point of View.

Company Net Income to Sales ratio has also decreased by 11.5%, Company needs to do anything as Irrespective of Increase in Sales, Net income of the company has decreased, Company needs to control its expenses.

At last Company position has not increased in the recent year.

	2017	Percent	2016	Percent
Sales	740,000	100.0%	625,000	100.0%
Cost of Goods Sold	560,300	75.7%	290,800	46.5%
Gross Profit	179,700	24.3%	334,200	53.5%
Operating Expenses	128,200	17.3%	218,500	35.0%
Net Income	51,500	7.0%	115,700	18.5%