Here are comparative statement data for Duke Company and Lord Company, two competitors. All balance sheet data are as of December 31, 2020, and December 31, 2019.

Instructions

a. Prepare a vertical analysis of the 2020 income statement data for Duke Company and Lord Company.

b. Comment on the relative profitability of the companies by computing the 2020 return on assets and the return on common stockholders? equity for both companies.

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Lord Company Duke Company 2020 2020 2019 2019 Net sales Cost of goods sold $1,849,000 $546,000 1,063,200 289,000 Operating expenses 240,000 82,000 Interest expense 6,800 3,600 Income tax expense 62,000 28,000 Current assets 325,975 $312,410 83,336 $ 79,467 Plant assets (net) 526,800 500,000 139,728 125,812| Current liabilities 66,325 75,815 35,348 30,281 Long-term liabilities Common stock, $10 par 113,990 90,000 29,620 25,000 500,000 500,000 120,000 120,000 Retained earnings 172,460 146,595| 38,096 29,998