Question: Comparative statement information for Douglas and Maulder Company, two (2) competitors, appear below. All balance sheet data are as of December 31, 2009, & December 31, 2008.
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Douglas Company Maulder Company
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2009
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2008
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2009
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2008
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Net sales
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$1,549,035
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$339,038
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Cost of goods sold
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1,080,490
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241,000
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Operating expenses
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79,000
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302,275
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Interest expense
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8,980
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2,252
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Income tax expense
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54,500
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6,650
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Current assets
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325,975
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$312,410
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83,336
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$79,467
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Plant assets (net)
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521,310
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500,000
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139,728
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125,812
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Current liabilities
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65,325
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75,815
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35,348
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30,281
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Long-term liabilities
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108,500
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90,000
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29,620
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25,000
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Common stock, $10 par
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500,000
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500,000
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120,000
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120,000
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Retained earnings
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173,460
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146,595
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38,096
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29,998
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Instructions;
[A] Make a vertical analysis of the 2009 income statement information for Douglas firm and Maulder firm in columnar form.
[B] Comment on the relative profitability of the companies by calculating the return on assets & the return on common stockholders' equity ratios for both firms. Be sure to show your computations for each ratio using M.S. Excel [the details of the information used to compute].