Comparative statement data for Breau Company and Shields Company, two competitors, appear below. All balance sheet...

 

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Comparative statement data for Breau Company and Shields Company, two competitors, appear below. All balance sheet data are as at December 31, 2003, and December 31, 2002. Net sales Cost of goods sold Operating expenses Interest expense Income tax expense Net cash provided by operating activities Current assets Capital assets (net) Current liabilities Long-term liabilities Common shares Retained earnings Breau Company 2003 2002 $250,000 160,000 51,000 11) 3,000 11,000 30,000 140,000 305,000 60,000 50,000 260,000 75,000 $110,000 270,000 52,000 68,000 210,000 50,000 Shields Company 2003 $1,200,000 720,000 252,000 Gross profit margin Profit margin Return on assets Asset turnover Return on common shareholders' equity 10,000 65,000 I 175,000 700,000 928,000 250,000 200,000 750,000 428,000 2002 Instructions: a) Prepare a vertical analysis of the 2003 income statement data for Breau Company and Shields Company 19 marks) $650,000 750,000 275,000 b) Calculate the following ratios for both companies. Be sure to show all your work ( /11 marks) 150,000 700,000 275,000 c) Based on the calculations, comment on the relative profitability of these companies Which company seems to be more profitable? Explain using three points of comparison (you may use point form.) /6 marks) Comparative statement data for Breau Company and Shields Company, two competitors, appear below. All balance sheet data are as at December 31, 2003, and December 31, 2002. Net sales Cost of goods sold Operating expenses Interest expense Income tax expense Net cash provided by operating activities Current assets Capital assets (net) Current liabilities Long-term liabilities Common shares Retained earnings Breau Company 2003 2002 $250,000 160,000 51,000 11) 3,000 11,000 30,000 140,000 305,000 60,000 50,000 260,000 75,000 $110,000 270,000 52,000 68,000 210,000 50,000 Shields Company 2003 $1,200,000 720,000 252,000 Gross profit margin Profit margin Return on assets Asset turnover Return on common shareholders' equity 10,000 65,000 I 175,000 700,000 928,000 250,000 200,000 750,000 428,000 2002 Instructions: a) Prepare a vertical analysis of the 2003 income statement data for Breau Company and Shields Company 19 marks) $650,000 750,000 275,000 b) Calculate the following ratios for both companies. Be sure to show all your work ( /11 marks) 150,000 700,000 275,000 c) Based on the calculations, comment on the relative profitability of these companies Which company seems to be more profitable? Explain using three points of comparison (you may use point form.) /6 marks)

Answer rating: 100% (QA)

3 4 Particulas Sales Less cost of goods Sold Gross Profit Less Expenses Income Statement as on 31st ... View the full answer