Chapter 2, Problem 2P

a.

Summary Introduction

Adequate information:Income statement and Balance Sheet of BRCMM Co. from previous problem no.1.

To Create:A common size income statement for 2015 & 2016.

Introduction: common size income statement can be computed by dividing each line item (for example, gross profit, operating income and sales and marketing expenses) by the top line (sales). Each item is then expressed as a percentage of sales.

b.

Summary Introduction

Adequate information:Income statement and Balance Sheet of BRCMM Co. from previous problem no.1.

To compute: A common size Balance sheet for 2015 & 2016.

Introduction:A common size balance sheet is a balance sheet that displays both the numeric value and relative percentage for total assets, total liabilities, and equity accounts, etc.

c.

Summary Introduction

Adequate information:Income statement and Balance Sheet of BRCMM Co. from previous problem no.1.

To compute:A common size statement for 2016. Based on sales and based on beginning cash balance Introduction:Common size cash flow statement is a standardized format of the cash flow statement which makes comparison across time periods and across peers more meaningful. Common size cash flow statement can be built by stating each item in a cash flow statement as a percentage of revenue or any other parameter for e.g. beginning cash balance etc.