Accounting information is provided below for The Book Wermz and two of its competitors for the fiscal year ending December 31, 2005.

Required Enter the data in a spreadsheet. Use the data to prepare an income statement for each company to include gross profit, operating income, pretax income, and net income. The income tax rate for each company is 35% of pretax income. Use formulas for computed values so that changes in any of the numbers shown above will be recomputed automatically in the spreadsheet. Format the income statement appropriately.
Following the income statement, enter the balance sheet data for each company. Use the income statement and balance sheet data to calculate the following ratios, which should follow the balance sheet data: gross profit margin, operating profit margin, profit margin, inventory turnover, asset turnover, return on assets, financial leverage (assets/ equity), and return on equity. The calculations should use cell references to the income statement and balance sheet data. Each ratio should include four digits to the right of the decimal.
Following the ratios, provide a brief response to the following questions.
1. Which company appears to be using a cost leadership strategy most effectively?
2. Which company appears to be using a product differentiation strategy most effectively?
3. What strategy does The Book Wermz appear to be following and how effective has this strategy been?
4. What effect has financial leverage had on the companies’ ratios?
Format each response so that it appears as wrapped text in a cell that is the width of the columns used to enter data in the spreadsheet.
Include the following captions at the top of the spreadsheet: “Financial Analysis Comparison”, followed by “December 31, 2005”. Captions should be centered over the spreadsheet columns in which accounting informationappears.

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The Book Wermz $6,230,000 3,426,500 2,155,000 Book Farm $20,584,000 13,390,200 5,212,600 670,500 5,845,000 13,254,000 6,687,000 Special Editions $4,896,200 2,153,100 1,852,000 Sales Cost of goods sold Operating expense Interest expense Inventory Total assets Stockholders' equity 0 190,000 106,000 1,987,600 5,623,000 3,370,000 2,246,000 6,895,000 4.826,000