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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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
$
745,363
512,363
233,000
44,270
9,320
18,640
160,770
56,269
104,501
950,007
494,003
Discount Computer
parts
$
Ś
S
$
50,925
32,744
18,181
1,818
545
146
15,672
5,485
10,187
77,169
56,334
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