Create a common-sized income statement for the three years

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Reference no: EM131506767

Discussion: Financial Decision Making

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: EM131506767

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