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Comparative Income Statement

Listed below are the results of XYZ Inc operations for 2005 and 2006.
(Assume 4,000 shares of outstanding stock for both years.)
2005 2006
Sales . . . . . . . . . . . . . . . . . .$300,000 $350,000
Utilities expenses . . . . . . . . . . . . 15,000 8,500
Employee salaries . . . . . . . . 115,000 110,000
Advertising expenses . . . . . . . . . . . 10,000 20,000
Income tax expense . . . . . . . . . . . 9,000 36,500
Interest expense . . . . . . . . . 25,000 15,000
Cost of goods sold . . . . . . . . . . . .115,000 85,000
Interest revenue . . . . . . . . . . . . . 10,000 10,000

1. Prepare a comparative income statement for XYZ Inc., for the years ended December 31, 2006, and 2005. Be sure to include figures for gross margin, operating income, income before taxes, net income, and earnings per share.
2. What advice would you give XYZ Inc, to improve its profitability for the year 2007?

Solution Summary

The solution explains how to prepare a comparative income statement and use it to evaluate the profitability.

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