1. Construct a Common Sized Income Statement for the two years presented.

Those ratios which use average in calculation, ending total balance has been considered as no information was provided for 2016.

gross profit margin	(gross profit / sales)*100
	2017 ($)	2018 ($)
gross proft	20000	22000
sales	40909	45000
gross profit margin	48.9%	48.9%
On comparing with the industry (50%), it has declined. It has remained stable for both the periods
operating profit margin	(operating profit / sales)*100
	2017 ($)	2018 ($)
operating profit	6182	6000
sales	40909	45000
operating profit margin	15.1%	13.3%
On comparing with the industry (15%), it has remained stable for 2017 but declined for 2018. It's deteriorating in 2018.
net profit margin	(net income / sales)*100
	2017 ($)	2018 ($)
net income	4336	4191
sales	40909	45000
net profit margin	10.6%	9.3%
On comparing with the industry (8%), it is doing better. It's deteriorating in 2018.
return on assets	net income / ending total assets
	2017 ($)	2018 ($)
net income	4336	4191
ending total assets	30000	33620
return on assets	14.5%	12.5%
On comparing with the industry (10%), it is doing better. It's deteriorating in 2018.
return on equity	net income / shareholders equity
	2017 ($)	2018 ($)
net income	4336	4191
shareholders equity	18000	20620
return on equity	24.1%	20.3%
On comparing with the industry (20%), it is was better in 2017 but remained stable in 2018. It's deteriorating in 2018.
current ratio	current assets / current liabilities
	2017 ($)	2018 ($)
current assets:
cash	2000	1800
accounts receivable	6000	7600
inventory	5000	5220
total current assets	13000	14620
current liabilities:
accounts payable	2000	2600
notes payable	3000	3300
accrued expenses	3000	3100
total current liabilities	8000	9000
current ratio	1.6	1.6
On comparing with the industry (1.5), it is was better. It remained stable for both the periods.
quick ratio	acid-assets / current liabilities
	2017 ($)	2018 ($)
acid assets
cash	2000	1800
accounts receivable	6000	7600
total acid assets	8000	9400
total current liabilities	16000	18800
quick ratio	0.5	0.5
On comparing with the industry (1.5), it is was worse for both the periods. No changes in both the periods
debt to total assets	total debt / total assets
	2017 ($)	2018 ($)
debt:
notes payable	3000	3300
bonds payable	4000	4000
total debt	7000	7300
ending total assets	30000	33620
debt to total assets	0.2	0.2
On comparing with the industry (0.5), it was worse for both the periods. No changes in both the periods
times interest earned	EBIT / interest expense
	2017 ($)	2018 ($)
EBIT	6182	6000
interest expenses	400	412
times interest earned	15.5	14.6
On comparing with the industry (25), it was worse for both the periods. It's deteriorating in 2018.
average collection period	(ending accounts receivable / sales)*365
	2017 ($)	2018 ($)
ending accounts receivable	6000	7600
sales	40909	45000
average collection period	54	62
On comparing with the industry (45 days), it was worse for both the periods. It's deteriorating in 2018.
inventory turnover	cost of goods sold / ending inventory
	2017 ($)	2018 ($)
cost of goods sold	20909	23000
ending inventory	5000	5220
inventory turnover	4.2	4.4
On comparing with the industry (8), it was worse for both the periods. No significant change in 2018.
total assets turnover	sales / ending total assets
	2017 ($)	2018 ($)
sales	40909	45000
ending total assets	30000	33620
total assets turnover	1.4	1.3
On comparing with the industry (1.6), it was low for both the periods. No significant change in 2018.

Bikini Bottom Construction Company (BBCC) manufactures various types of high- quality punching and deep-drawing press tools for kitchen appliance manufacturers. Pearl, the finance manager of BBCC, has submitted a justification to support the application for a short-term loan from the Queensville Interstate Bank (OIB) to finance increased sales. The consolidated income statement and balance sheet of BBCC. submitted with the justification to QIB, follow BBCC Income Statement for 2017 and 2018 (000 dollars)