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CFA Level 1
Financial Reporting and Analysis

Calculating Operating Income from Common-Size Statements

Medium Analysis Techniques Common-size Statements

Common-size financial statements are essential tools for analyzing a company's performance by expressing each line item as a percentage of a standard figure. This format allows for easier comparison across firms and over different periods. Consider the following common-size income statement for XYZ Corporation:

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Sales Revenue: 100%
Cost of Goods Sold (COGS): 60%
Gross Profit: 40%
Operating Expenses: 20%
Operating Income: 20%
Other Income: 5%
Net Income: 15%
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If XYZ Corporation has total sales revenue of $500,000, what is the dollar amount of the operating income?

Hint

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