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Analyzing the Component Percentage for Net Income This activity is used in my Accounting (Honors) class. After introducing Income Statements, we have a discussion on whether they feel that the company was profitable looking strictly at the Revenue or Net Income. Hands-on-Activity: Students are given a list of companies to locate on www. Hoovers.com. There are usually 20 companies divided into 8 industries, each industry has at least 2 companies. This allows you to fluctuate depending on the number of students in the class. Student will locate the Income Statement and write the Revenue and Net Income on an index Card. They are to locate in the classroom everyone in their industry. Based strictly on the Revenue, they are to choose which company was the most profitable. Then, repeat the process for Net Income. As an industry, they are to calculate Percentage of Net Income. The group compares their companies' Percentage of Net Income and chooses which company was the most profitable. They are very surprised about the outcome. We further discuss how companies need to compare themselves with the industry performance standard to determine acceptable levels of performance. This activity usually takes 35 minutes to complete. Pamela White Business Information Technology Teacher Chicopee, Comprehensive High School Chicopee, MA 01020 413-594-3555
Analyzing the Component Percentage for Net Income
By: Pamela WhiteChicopee Comprehensive High School
Analyzing an Income Statement
Discussion on whether they feel that the company was profitable looking strictly at the:
RevenueNet IncomeComponent Percentage Industry Average
Prep Work
Pre-select 20 companies divided into 8 industries, each industry has at least 2 companies
Allows you to fluctuate depending on number of students in the class
Students are given an index card with a company pre-selected by me to locate on www.Hoovers.com
Try and shuffle the cards, so student aren’t located next to each other.
Company Name Revenue Net Income % of Net Sale
Claiborne Liz, Inc. 4,847,753,000 491,278,000
Oakley, Inc 648,131,000 89,944,000
Avon Products, Inc. 8,149,600,000 1,124,200,000
Kimberly Clark Corp 15,902,600,000 1,580,600,000
Coca Cola Enterprise 18,706,000,000 790,000,000
Pepsi Bottling Group, Inc. 11,885,000,000 713,000,000
McDonald’s Corp 15,351,700,000 3,701,600,000
Wendy’s Corp 3,028,414,000 338,064,000
Ford Motors Corp 153,503,000,00 1,996,000,000
General Motors Corp 192,604,000,000 -16,931,000,000
Abercrombie & Fitch Co 2,784,711,000 549,412,000
Aeropostale, Inc. 2,309,371,000 476,967,000
Gap, Inc. 15,943,000,000 1,640,000
Activity
Locate www.hoovers.comType in name of companyIncome Statement can be located on left side of screenclick on “Income Statement” and find:
The Operating RevenueNet Income
Write the information on their index card
Find Your competitor
Students are to locate their competitor in the room
Compare information written on your index cardWho generated the most Revenue?Who generated the most Net Income?
Any surprises?
Component Percentage of Net Income
Student will calculate the Component Percentage for Net Income How did your company compare?
Any surprises?Discuss how companies need to compare themselves with the industry performance standard to determine acceptable levels of performance.