Posted in BioTek”s 2005 annual report included the following income statement information.
|
(In millions, except earnings per share) |
|||
|
Year Ended June 30 |
2003 |
2004 |
2005 |
|
Revenue |
$8,671 |
$11,358 |
$14,484 |
|
Operating expenses: |
|||
|
Cost of revenue |
1,188 |
1,085 |
1,197 |
|
Research and development |
1,432 |
1,925 |
2,502 |
|
Acquired in-process technology |
0 |
0 |
296 |
|
Sales and marketing |
2,657 |
2,856 |
3,412 |
|
General and administrative |
316 |
362 |
433 |
|
Other expenses |
19 |
259 |
230 |
|
Total operating expenses |
5,612 |
6,487 |
8,070 |
|
Operating income |
3,059 |
4,871 |
6,414 |
|
Interest income |
320 |
443 |
703 |
|
Income before income taxes |
3,379 |
5,314 |
7,117 |
|
Provision for income taxes |
1,184 |
1,860 |
2,627 |
|
Net income |
$2,195 |
$3,454 |
$4,490 |
|
Earnings per share |
$0.86 |
$1.32 |
$1.67 |
Ratios often are used to assess changes in financial statement information over time. Use Bio-Tek”s income statements to answer the following questions. Express your answers as percentages.
a. What was the ratio of net income to net revenues each year?
b. What was the ratio of cost of revenues (cost of goods sold) to net revenues each year?
c. What was the ratio of operating expenses to net revenues each year?
d. What was the percentage change in net income between 2003 and 2004 and between 2004 and 2005? (Hint: Divide the increase in net income from one year to the next by the net income for the earlier year.)
e. Did Bio-Tek”s operating results improve between 2003 and 2005? Explain your answer.
