Income Statement Analysis | Economics Writers




.     IncomeStatement
 
Referencing this week’s readings and lecture, address the following: 
o    Whatare the two causes of an increasing or decreasing sales number?
o    Discussall 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 forthe years ending December 31, 2010, 2009, and 2008. Write a one-paragraphanalysis of Elf Corporation’s profit performance for the period.  Create acommon-sized income statement for the three years. What conclusions can youdraw from the different parts of the statement? What are the causes and effectsof Elf’s performance for those three years?  
Elf Corporation Income Statements for the Years Ending December 31

(inmillions)

2010

2009

2008

Sales

$700

$650

$550

Cost ofgoods sold

  350

  325

  275

Grossprofit

  350

  325

  275

OperatingExpenses:

 

 

 

Administrative

  100

  100

  100

Advertisingand marketing

    50

    75

   75

Operatingprofit

$200

$150

$100

Interestexpense

    70

    50

   30

Earningsbefore tax

$130

$100

$  70

Tax expense(50%)

    65

    50

    35

Net income

$  65

$  50

$  35

 
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