common size income statement

Q19. Using the data below prepare a common size income statement?

	($ 000)	($ 000)
Sales revenue		30,000
Cost of goods sold		21,000
Gross profit		9,000
operating expenses
Selling expenses	3,000
General and admin. expenses	1,800
Lease expenses	200
Depreciation expenses	1,000
Total operating expenses		6,000
Operating profit		3,000
Interest		1,000
EBT		2,000
Tax (40% of EBT)		800
Net profit		1,200

Q20. Use the data given below to calculate the values for the following:

sales	$40,000,000
Gross Profit Margin	80%
Operating Profit Margin	35%
Net Profit Margin	8%
Return on total assets	16%
Return on common equity	20%
Total asset turnover	2
Average collection period	62.2 days

Required:

a) Gross profit

b) Cost of goods sold

c) Operating profit

d) Operating expenses

e) Earnings available for common shareholders

f) Total assets

g) Total common stock equity

h) Accounts receivable

It is a 365 days year, assume all sales are on credit basis.

Q21. Euro Designs, Inc., expects sales during 2010 to rise from the 2009 level of $3.5 million to $3.9 million. Because of a scheduled large loan payment, the interest expense in 2010 is expected to drop to $325,000. The firm plans to increase its cash dividend payments during 2010 to $320,000. The company’s year-end 2009 income statement is below.

	($ 000)
Sales	3,500
Cost of goods sold	1,925
Gross profit	1,575
operating expenses	420
Operating profit	1,155
Interest	400
EBT	755
Tax (40% of EBT)	302
Net profit	453
Cash Dividend	250
Addition to retained earnings	203

Use the percent-of-sales method to prepare a 2007 pro forma income statement for Euro Designs, Ltd.