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Yarrick Company - Common income statement

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3.11. Income statements for Yarrick Company for the years ending December 31, 2007, 2006,
and 2005 are shown below. Prepare a common-size income statement and analyze the
profitability of the company.

Yarrick Company Income Statements for the Years
Ending December 31, 2007, 2006, and 2005
In millions 2007 2006 2005
Net sales 237 155 134
Cost of goods sold 138 84 72
Gross profit 99 71 62
Sales, gen/admin exp 42 31 39
research/development 38 33 54
Operating profit 19 7 (31)
Income tax expense (benefit) 7 2 (11)
Net profit 12 5 (20)

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Solution discusses Yarrick Company - Common income statement with analysis of profitablity

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Common size ratio is calculated in following manner:

= Specific Item/Reference item

In case of Income Statement , the Reference item is Net ...

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