Consider the data for Randall Department Stores presented in Problem P15-31B.
The Randall Department Stores, Inc. chief executive officer (CEO) has asked you to compare the company's profit performance and financial position with the averages for the industry. The CEO 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 balance sheet for Randall. The first column of each statement should present Randall's common-size statement, and the second column, the industry averages.
2. For the profitability analysis, compute Randall's (a) gross profit percentage and (b) profit margin ratio. Compare these figures with the industry averages. Is Randall's profit performance better or worse than the industry average?
3. For the analysis of financial position, compute Randall's (a) current ratio and (b) debt to equity ratio. Compare these ratios with the industry averages. Assume the current ratio industry average is 1.47, and the debt to equity industry average is 1.83. Is Randall's financial position better or worse than the industry averages?

Transcribed Image Text:

RANDALL DEPARTMENT STORES, INC. Income Statement Compared with Industry Average Year Ended December 31, 2018 RANDALL DEPARTMENT STORES, INC. Balance Sheet Compared with Industry Average December 31, 2018 Industry Average Industry Average Randall Randall $ 783,000 $ 310,040 Net Sales Revenue 100.0% 70.9% Current Assets Cost of Goods Sold 527,742 65.8 Property, Plant, and Equipment, Net Intangible Assets, Net 23.6 119,600 Gross Profit 255,258 34.2 7,360 0.8 Operating Expenses 163,647 19.7 Other Assets 23,000 4.7 $ 460,000 Operating Income 100.0% 91,611 14.5 Total Assets Other Expenses 6,264 $ 85,347 0.4 Net Income 14.1% $ 210,680 Current Liabilities 48.1% Long-term Liabilities 103,960 16.6 Total Liabilities 314,640 64.7 Stockholders' Equity 145,360 35.3 Total Liabilities and Stockholders' Equity $ 460,000 100.0%