A. Prepare common-size income statements for each company. Comment on differences in the relative size of each line item. B. Compute profit margin, return on assets, and return on stockholders' equity for each company. Which company appears more profitable? Sales Cost of goods sold Gross Profit Selling, General, and Administrative Expenses Other Operating Expenses Interest Expense Earnings before taxes Taxes Net Income Average Total Assets Average Stockholder's equity Good Tech Company S S S S 745,363 512,363 233,000 Discount Computer parts S 44,270 9,320 18,640 160,770 56,269 104,501 S 950,007 S 494,003 S 50,925 32,744 18,181 1,818 545 146 15,672 5,485 10,187 77,169 56.334

A. Prepare common-size income statements for each company. Comment on differences in the relative size of each line item. B. Compute profit margin, return on assets, and return on stockholders' equity for each company. Which company appears more profitable? Sales Cost of goods sold Gross Profit Selling, General, and Administrative Expenses Other Operating Expenses Interest Expense Earnings before taxes Taxes Net Income Average Total Assets Average Stockholder's equity Good Tech Company S S S S 745,363 512,363 233,000 Discount Computer parts S 44,270 9,320 18,640 160,770 56,269 104,501 S 950,007 S 494,003 S 50,925 32,744 18,181 1,818 545 146 15,672 5,485 10,187 77,169 56.334

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 87PSB

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