Prepare the common-size financial statement for the entities below and provide a reasoned explanation of the benefits relative to ratios when used to compare performance and establish trends. Income statements for year ending 31 December 2020 Energy Plus Co. ltd V8 Splash Ltd. $’000 $’000 Net revenue 35,119 30,990 Cost of goods sold 12,693 11,088 Gross profit 22,426 19,902 Selling & administrative expenses 13,158 11,358 Other operating expenses 819 313 Operating income 8,449 8,231 Interest income 833 355 Other income (net of expenses) 6,447 988 Profits before tax 14,193 8,864 Income tax expense 2,384 2,040 Profits after taxes 11,809 6,824
- Prepare the common-size financial statement for the entities below and provide a reasoned explanation of the benefits relative to ratios when used to compare performance and establish trends.
Income statements for year ending 31 December 2020
Energy Plus Co. ltd V8 Splash Ltd.
$’000 $’000
Net revenue 35,119 30,990
Cost of goods sold 12,693 11,088
Gross profit 22,426 19,902
Selling & administrative expenses 13,158 11,358
Other operating expenses 819 313
Operating income 8,449 8,231
Interest income 833 355
Other income (net of expenses) 6,447 988
Profits before tax 14,193 8,864
Income tax expense 2,384 2,040
Profits after taxes 11,809 6,824
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