Analyzing an income statement

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Reference no: EM13835881

 


 1.     Income Statement

  address the following: 

o    What are the two causes of an increasing or decreasing sales number?

o    Discuss all the reasons that might explain an increase or decrease in gross profit.

Respond to at least two of your classmates' posts.

2.     Analyzing an Income Statement

 Income statements are presented in the table below for the Elf Corporation for the years ending December 31, 2010, 2009, and 2008. Write a one-paragraph analysis of Elf Corporation's profit performance for the period.  Create a common-sized income statement for the three years. What conclusions can you draw from the different parts of the statement? What are the causes and effects of Elf's performance for those three years?  

Elf Corporation Income Statements for the Years Ending December 31

(in millions)

2010

2009

2008

Sales

$700

$650

$550

Cost of goods sold

  350

  325

  275

Gross profit

  350

  325

  275

Operating Expenses:

 

 

 

Administrative

  100

  100

  100

Advertising and marketing

    50

    75

    75

Operating profit

$200

$150

$100

Interest expense

    70

    50

    30

Earnings before tax

$130

$100

$  70

Tax expense (50%)

    65

    50

    35

Net income

$  65

$  50

$  35

 

 

Reference no: EM13835881

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