OMM 622 Week 3 Discussion 2

Week 3 – Discussion 2
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Your initial discussion thread is due on Day 3 (Thursday) and you have until Day 7 (Monday) to respond to your classmates. Your grade will reflect both the quality of your initial post and the depth of your responses. Refer to the Discussion Forum Grading Rubric under the Settings icon above for guidance on how your discussion will be evaluated.
  
Analyzing an   Income Statement
Income statements are presented in the table below for the Elf Corporation for the years ending December 31, 2010, 2009, and 2008. Write a one-paragraph analysis of Elf Corporation’s profit performance for the period. Create a common-sized income statement for the three years. What conclusions can you draw from the different parts of the statement? What are the causes and effects of Elf’s performance for those three years?
Elf Corporation Income Statements for the Years Ending December 31
  
(in   millions)

2010

2009

2008
 
Sales

$700

$650

$550
 
Cost of   goods sold

 350

 325

 275
 
Gross   profit

 350

 325

 275
 
Operating   Expenses:
 
Administrative

 100

 100

 100
 
Advertising   and marketing

     50

     75

     75
 
Operating   profit

$200

$150

$100
 
Interest   expense

     70

     50

     30
 
Earnings   before tax

$130

$100

$  70
 
Tax   expense (50%)

     65

   50

     35
 
Net income

$  65

$  50

$  35
Respond to at least two of your classmates’ posts.