Decide (a) whether Sanfields ability to pay debts and to sell inventory improved or deteriorated during 2011 and (b) whether the investment attractiveness of its common stock appears to have increased or decreased.
Russel Department stores INC.
- Income Statement
- Russell Industry Average
- Net Sales 77,000 100.0%
- COGS 523,698 65.8
- Gross Profit 253,302 34.2
- Operating ex. 162,393 19.7
- operating income 90,909 14.5
- other expense 7,770 0.4
- Net Income 83,139 14.1
Russel Dep Balance Sheet
Russell Industry average
- Current Assets 330,750 70.9%
- fixed assets,net 123,480 23.6
- Intangible Assets,net 9,800 0.8
- Other assets 25,970 4.7
- Total assets 490,000 100.0
- Current liab 227,360 48.1
- Long term liab 111,720 16.6
- Stockholders equity 150,920 35.3
- Total liabilities and 490,000 100.0
stock holders
Requirements
R1. Prepare a common-size income statement and balance sheet for Russell. The first column of each statement should present Russell's common-size statement, and the second column, the industry averages.
R2. For the profitability analysis, compute Russell's (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 these figures with the industry averages. Is Russell's profit performance better or worse than the industry average?
R3. For the analysis of financial position, compute Russell's (a) ratio of current assets to total assets and (b) ratio of stockholders' equity to total assets. Compare these ratios with the industry averages. Is Russell's financial position better or worse than the industry averages?