Top managers of Gilligan Products, Inc., have asked for your help in comparing the companys profit performance

Question:

Top managers of Gilligan Products, Inc., have asked for your help in comparing the company€™s profit performance and financial position with the average for the industry. The accountant has given you the company€™s income statement and balance sheet and also the following data for the industry:

Top managers of Gilligan Products, Inc., have asked for your

Requirements
1. Prepare a common-size income statement and balance sheet for Gilligan Products. The first column of each statement should present Gilligan Products€™ common-size statement, and the second column should show the industry averages.
2. For the profitability analysis, compare Gilligan Products€™ (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 with the industry averages. Is Gilligan Products€™ profit performance better or worse than the average for the industry?
3. For the analysis of financial position, compare Gilligan Products€™ (a) ratios of current assets and current liabilities to total assets and (b) ratio of stockholders€™ equity to total assets with the industry averages. Is Gilligan Products€™ financial position better or worse than the average for theindustry?

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Financial accounting

ISBN: 978-0132751124

9th edition

Authors: Walter T. Harrison Jr., Charles T. Horngren, C. William Thom

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