The Portable MBA in Finance and Accounting, 3rd Edition

602

EXHIBIT 18.2 ACME Manufacturing Inc.: Summa

ry of condensed income statements 1996 –2000.

($million)

Growth R

ates

2000

1999

1998

1997

1996

1996–2000

1999–2000

Revenues

$50.29 $48.59 $40.85 $37.94 $33.02

11.1%

3.5%

Cost of goods sold

34.80 33.95 28.45 25.25 22.63

11.4

2.5

Gross profit

15.49 14.64 12.39 12.69 10.39

10.5

5.7

Operating expenses

5.95 5.58 4.34 3.72 3.31

15.8

6.7

Officers’ compensation

3.38 2.86 3.53 3.03 2.23

11.1

18.4

Operating EBITDA

6.15 6.20 4.52 5.94 4.86

6.0

−0.9

Depreciation and amortization

0.31

0.22

0.10

0.05

0.07

44.9

42.3

Operating income (EBIT)

5.84

5.99

4.42

5.89

4.79

5.1

−2.5

Miscellaneous (income)

(0.30)

(0.25)

(0.19)

(0.18)

(0.12)

26.1

17.1

Interest expense

0.84 0.74 0.55 0.47 0.59

9.0

12.6

Pretax income

5.29 5.49 4.06 5.60 4.31

5.3

−3.6

Less: Income taxes*

—

—

—

—

—

N/A

N/A

Net income

$ 5.29 $ 5.49 $ 4.06 $ 5.60 $ 4.31

5.3%

−3.6%

Common Size

2000

1999

1998

1997

1996

Revenues

100.0%

100.0%

100.0%

100.0%

100.0%

Cost of goods sold

69.2

69.9

69.6

66.6

68.5

Gross profit

30.8

30.1

30.3

33.4

31.5

Operating expenses

11.8

11.5

10.6

9.8

10.0

Officers’ compensation

6.7

5.9

8.6

8.0

6.8

Operating EBITDA

12.2

12.8

11.1

15.7

14.7

Depreciation and amortization

0.6

0.5

0.2

0.1

0.2

Operating income (EBIT)

11.6

12.3

10.8

15.5

14.5

Miscellaneous (income)

−0.6

−0.5

−0.5

−0.5

−0.4

Interest expense

1.7

1.5

1.3

1.2

1.8

Pretax income

10.5

11.3

9.9

14.8

13.1

Less: Income taxes*

0.0

0.0

0.0

0.0

0.0

Net income

10.5%

11.3%

9.9%

14.8%

13.1%

* ACME is an S corporation for tax purposes and taxab

le income is passed through to the shareholder. Thus, the co

rporation does

not pay income taxes.