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.