Chelsey's Auto Sales asked for your help in comparing the company's profit performance and financial position with

Question:

Chelsey's Auto Sales asked for your help in comparing the company's profit performance and financial position with the average for the auto sales industry. The owner has given you the company's income statement and balance sheet as well as the industry average data for retailers of used autos.

Chelsey's Auto Sales Income Statement Compared with Industry Average Year Ended December 31, 2016 INDUSTRY CHELSEY'S $52

Chelsey's Auto Sales Balance Sheet Compared with Industry Average December 31, 2016 INDUSTRY CHELSEY'S AVERAGE Current A


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

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Related Book For  book-img-for-question

Financial Accounting

ISBN: 978-0134436111

4th edition

Authors: Robert Kemp, Jeffrey Waybright

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