Financial Accounting: P14-1A Comparative statement data for Douglas Company and Maulder Company

Financial Accounting

P14-1A

Comparative statement data for Douglas Company and Maulder Company, two competitors, appear below. All balance sheet data are as of December 31, 2012, and December 31, 2011.

Douglas Company Maulder Company

2012 2011 2012 2011

Net sales 1,549,035 339,038

Cost of goods sold 1,080,490 241,000

Operating expenses 302,275 79,000

Interest expense 8,980 2,252

Income tax expense 54,500 6,650

Current assets 325,975 312,410 83,336 79,467

Plant assets (net) 521,310 500,000 139,728 125,812

Current liabilities 65,325 75,815 35,348 30,281

Long-term liabilities 108,500 90,000 29,620 25,000

Common stock, $10 par 500,000 500,000 120,000 120,000

Retained earnings 173,460 146,595 38,096 29,998

Instructions:

a. Complete the vertical analysis of the 2012 income statement data for Douglas Company and Maulder Company in columnar form. (Round percentages to 1 decimal place, e.g. 10.5. Enter all amounts as positive amounts and subtract where necessary.)

b. Comment on the relative profitability of the companies by computing the return on assets and the return on common stockholders' equity ratios for both companies. (Round intermediate calculations to 0 decimal places, e.g. 1,250 and the final answers to 1 decimal places, e.g. 10.5%.)
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