Question

Bathrooms, Inc., manufactures bathroom equipment. Shown below for the current year are the income statements for the company and a common size summary for the industry in which the company operates.


Instructions
a. Prepare a two-column common size income statement for Bathrooms, Inc. The first column should show for Bathrooms, Inc., all items expressed as a percentage of net sales. The second column should show the equivalent industry average for the data given in the problem. The purpose of this common size statement is to compare the operating results of Bathrooms, Inc. with the average for the industry.
b. Comment specifically on differences between Bathrooms, Inc., and the industry average with respect to gross profit on sales, selling expenses, general and administrative expenses, operating income, net income, and return on assets. Suggest possible reasons for the more importantdisparities.


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  • CreatedApril 17, 2014
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