Pathfinder Inc. has asked you to compare the company's profit performance and financial position with the industry average. The proprietor has given you the company's income statement and balance sheet as well as the industry average data for retailers.

Requirements
1. Prepare a common-size income statement and a balance sheet for Pathfinder. The first column of each statement should present Pathfinder's common-size statement, and the second column, the industry averages.
2. For the profitability analysis, compute Pathfinder'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 Pathfinder's profit performance better or worse than the industry average?
3. For the analysis of financial position, compute Pathfinder's (a) ratio of current assets to total assets, and (b) ratio of shareholders' equity to total assets. Compare these ratios with the industry averages. Is Pathfinder's financial position better or worse than the industry averages?

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Pathfinder Inc. Income Statement Compared with Industry Average For the Year Ended December 31, 2014 Pathfinder Industry Average Net sales Cost of goods sold Gross profit Operating expenses Operating income Other expenses Net income 700,000 497,000 203,000 163,000 40,000 3,000 $ 37,000 100.0% 65.8 34.2 19.7 14.5 0.4 14.1% Pathfinder Inc. Balance Sheet Compared with Industry Average As at December 31, 2014 Pathfinder Industry Average Current assets Fixed assets, net Intangible assets, net Other assets Total $300,000 74,000 4,000 22,000 $400,000 70.9% 23.6 0.8 100.0% Current liabilities Long-term liabilities Shareholders' equity Total 206,000 64,000 130,000 400,000 48. 1% 16.6 35.3 100.0%