Common-Size Income Statement
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Reynolds American Inc. pages available for free this week:
- Cash Flow Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Capital Asset Pricing Model (CAPM)
- Operating Profit Margin since 2005
- Debt to Equity since 2005
- Total Asset Turnover since 2005
- Price to Sales (P/S) since 2005
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Reynolds American Inc., common-size consolidated income statement
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).
- Net Sales Composition
- Net sales consistently represented 100% of net sales including excise taxes throughout the observed periods. Sales related to parties decreased gradually from 2.8% in 2012 to 1.34% in 2016, indicating a declining reliance on related party sales as a portion of total sales.
- Cost of Products Sold and Excise Taxes
- The cost of products sold as a percentage of net sales showed a fluctuating but generally decreasing trend from -35.34% in 2012 to -28.74% in 2016, suggesting improved cost efficiency or changes in product mix. Excise taxes steadily declined from -32.08% in 2012 to -25.78% in 2016, contributing to a more favorable gross margin.
- Gross Profit Margin
- Gross profit margin exhibited a positive trend over the years, increasing from 32.58% in 2012 to 45.48% in 2016. This improvement reflects the combined effect of decreasing product costs and excise taxes, enhancing overall profitability at the gross level.
- Selling, General and Administrative Expenses (SG&A)
- SG&A expenses as a percentage of net sales fluctuated modestly, initially decreasing from -12.02% in 2012 to -11.46% in 2016, albeit with peaks in 2014 and 2015 where it increased to -15.47% and -14.10%, respectively. The overall slight reduction in SG&A points to controlled operating expenses relative to net sales.
- Non-Recurring Items and Charges
- There were notable gains from divestitures starting in 2015, with values increasing from 21.37% to 28.86% in 2016, contributing significantly to operating income in these years. Other charges such as asset impairments and restructuring were sporadic and generally small in magnitude, with restructuring noted only in 2012 and impairment charges occurring irregularly.
- Amortization and Other Operating Expenses
- Amortization expenses were consistently low, fluctuating slightly around zero, indicating stable intangible asset amortization. Other operating charges such as trademark impairments appeared only in earlier years (2012 and 2013), diminishing thereafter.
- Operating Income
- Operating income showed a marked increase, starting at 18.11% in 2012, peaking at 62.74% in 2016. This substantial growth is attributable primarily to improved gross profits and gains on divestitures, offsetting the impact of SG&A expenses and other charges.
- Interest and Debt Expenses
- Interest and debt expenses as a percentage of net sales were relatively stable with a slight upward trend, ranging from -1.91% in 2012 to around -3.83% in 2015, slightly decreasing to -3.72% in 2016. Interest income remained minimal and stable throughout the period.
- Other Income and Expenses
- Other income and expenses were variable and generally minor, with some negative impact in 2013 and 2016. No consistent pattern emerged from this item.
- Income from Continuing Operations Before Taxes
- This indicator reflected strong improvement, rising from 15.97% in 2012 to 57.53% in 2016, paralleling the trend observed in operating income and indicating enhanced earnings power before tax considerations.
- Provision for Income Taxes
- The provision for income taxes increased significantly in 2015 and 2016 to about -21% of net sales, a notable rise compared to earlier years where it fluctuated between -5.57% and -8.55%. This suggests higher effective tax rates or increased taxable income during later years.
- Net Income
- Net income exhibited a robust upward trajectory from 10.4% in 2012 to 36.05% in 2016, highlighting significant profitability growth. The income from discontinued operations was negligible and only appeared slightly in 2014.