Problem: 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)
|