Here are comparative statement data for Dean Company and Gerald Company, two competitors. All balance sheet data are as of December 31, 2014, and December 31, 2013.

Instructions

(a) Prepare a vertical analysis of the 2014 income statement data for Dean Company and Gerald Company.

(b) Comment on the relative profitability of the companies by computing the return on assets and the return on common stockholders' equity for both companies.

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Dean Compan 2014 Gerald Company 2014 2013 2013 $350,000 175,000 72,000 5,000 22,000 130,000 400,000 60,000 50,000 340,000 80,000 S1,200,000 648,000 266,000 10,000 54,000 700,000 1,000,000 250,000 200,000 950,000 300,000 1 Cost of goods sold Operating expenses Interest expense Income tax expense Plant assets (net) Current iabilities Long-term liabilities Common stock $100,000 270,000 58,000 72,000 200,000 40,000 S650,000 750,000 275,000 150,000 700,000 275,000