Perplexed by the declining profit margin and the rate of growth of EASY's net income, Melissa Hampton pressed the company management for more detailed information.
The management asks you, one of EASY's financial analysts, to compute component and percentage changes for the following statements and determine if there were any positive or negative trends.
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EASY CHAIR COMPANY INCOME STATEMENT (dollars in millions)
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2000
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1999
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1998
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1997
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Net sales
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$592.3
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$553.2
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$486.8
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$420.0
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Cost of sales
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(430.4)
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(397.8)
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(352.1)
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(289.8)
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Gross profit
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161.9
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135.4
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134.7
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130.2
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Selling, general, and administrative expenses
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(111.6)
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(106.9)
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(91.4)
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(85.5)
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Income from operations
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50.3
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48.5
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43.3
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44.7
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Interest expense
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(7.2)
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(7.6)
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(4.0)
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(1.9)
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Other income
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2.5
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3.1
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2.7
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2.1
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Income before taxes
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45.6
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44.0
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42.0
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44.9
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Taxes
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(17.3)
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(16.5)
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(15.5)
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(20.3)
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Net income
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$28.3
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$27.5
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$26.5
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$24.6
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