Consider the data for Specialty Department Stores presented in Problem.

Requirements
1. Prepare a common-size income statement and balance sheet for Specialty. The first column of each statement should present Specialty’s common-size statement, and the second column, the industry averages.
2. For the profitability analysis, compute Specialty’s (a) gross profit percentage and (b) profit margin ratio. Compare these figures with the industry averages. Is Specialty’s profit performance better or worse than the industry average?
3. For the analysis of financial position, compute Specialty’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 Specialty’s financial position better or worse than the industryaverages?

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SPECIALTY DEPARTMENT STORES, INC. Income Statement Compared with Industry Average Year Ended December 31, 2014 Industry Average 100.0% 65.8 Net Sales Cost of Goods Sold Gross Profit Operating Expenses Operating Income Other Expenses Net Income Specialty 782,000 528,632 253,368 163,438 89,930 4,692 S 85,238 34.2 19.7 14.5 0.4 14.1% SPECIALTY DEPARTMENT STORES, INC. Balance Sheet Compared with Industry Average December 31, 2014 Industry Specialty Average 70.9% Current Assets Fixed Assets, Net Intangible Assets, Net Other Assets Total Assets 303,750 117,000 5,850 23,400 450,000 23.6 0.8 100.0% Current Liabilities Long-term Liabilities Total Liabilities Stockholders' Equity Total Liabilities and Stockholders' Equity $ 208,800 102,600 311,400 138,600 $450,000 48.1 % 16.6 64.7 35.3 100.0%