Chapter 12, Problem 32AP

1.

To determine

Prepare a two column common size income statement and a two column common size balance sheet for Company OA.

2.

To determine

Evaluate the profitability ratios (a) ratio of gross profit to net sales; (b) ratio of operating income to net sales; and (c) ratio of net income to net sales. Compare those figures with industry averages and state whether those figures are better or worse than industry averages.

3.

To determine

Evaluate the profitability ratios (a) ratio of current assets to total assets; and (b) ratio of stockholders’ equity to total assets. Compare those figures with industry averages and state whether those figures are better or worse than industry averages.