A2. (Common size income statements) Express each of the following as a percentag

Question

   

A2. (Common size income statements) Express each of the following as a percentage of total revenues for 2013 and 2014. Indicate if you believe the percentages have changed substantially.

    A. Gross profit
    B. Operating expenses
    C. Operating income
    D. Income before taxes
    E. Income taxes
    F. Net income

CONSOLIDATED BALANCE SHEETS (USD $)
    In millions, unless otherwise specified    Feb. 1, 2014    Feb. 2, 2013
    Current assets:       
    Cash and cash equivalents    $1,510    $1,460
    Short-term investments    0    50
    Merchandise inventory    1,928    1,758
    Other current assets    992    864
    Total current assets    4,430    4,132
    Property and equipment, net    2,758    2,619
    Other long-term assets    661    719
    Total assets    7,849    7,470
    Current liabilities:       
    Current maturities of debt    25    0
    Accounts payable    1,242    1,144
    Accrued expenses and other current liabilities    1,142    1,092
    Income taxes payable    36    108
    Total current liabilities    2,445    2,344
    Long-term liabilities:       
    Long-term debt    1,369    1,246
    Lease incentives and other long-term liabilities    973    986
    Total long-term liabilities    2,342    2,232
    Stockholders’ equity:       
    Common stock $0.05 par value, authorized 2,300 shares and Issued 1,106 shares for all periods presented; outstanding 446 and 463 shares    55    55
    Additional paid-in capital    2,899    2,864
    Retained earnings    14,218    13,259
    Accumulated other comprehensive income    135    181
    Treasury stock at cost (660 and 643 shares)    14,245    13,465
    Total stockholders’ equity    3,062    2,894
    Total liabilities and stockholders’ equity    $7,849    $7,470

    Table 4.13 The Gap, Inc. CONSOLIDATED STATEMENTS OF INCOME
    ($ and shares in millions except per share amounts)    Fiscal year
       2014    2013    2012
    Net sales    $16,148    $15,651    $14,549
    Cost of goods sold and occupancy expenses    9,855    9,480    9,275
    Gross profit    6,293    6,171    5,274
    Operating expenses    4,144    4,229    3,836
    Operating income    2,149    1,942    1,438
    Interest expense    61    87    74
    Interest income    (5)    (6)    (5)
    Income before income taxes    2,093    1,861    1,369
    Income taxes    813    726    536
    Net income    1,280    1,135    $833
    Weighted-average number of shares—basic    461    482    529
    Weighted-average number of shares—diluted    467    488    533
    Earnings per share—basic    $2.78    $2.35    $1.57
    Earnings per share—diluted    $2.74    $2.33    $1.56

Explanation / Answer

Common size Income Statements

For the year 2013 and 2014

Although all the percentages have changed marginally, but operating expenses have changed substatially since it reduced from $4,229 million to $4,144 million from 2013 to 2014

Kindly give a positive rating if you are satisfied with the answer. Feel free to ask if you have any doubts. Thanks.

2013 2104 % of revenue 2013 % of revenue 2014 Gross profit 6,171 6,293 39.43 38.97 Operating expenses 4,229 4,144 27.02 25.66 Operating income 1,942 2,149 12.41 13.31 Inome before tax 1,861 2,093 11.89 12.96 Income tax 726 813 4.64 5.03 Net income 1,135 1,280 7.25 7.93

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