Top managers of OHare Products, Inc., have asked for your help in comparing the companys profit performance
Question:
Requirements
1. Prepare a common-size income statement and balance sheet for OHare Products. The first column of each statement should present OHare Products common-size statement, and the second column should show the industry averages.
2. For the profitability analysis, compare OHare Products (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 with the industry averages. Is OHare Products profit performance better or worse than the average for the industry?
3. For the analysis of financial position, compute OHare Products (a) ratios of current assets and current liabilities to total assets and (b) ratio of stockholders equity to total assets. Compare these ratios with the industry averages. Is OHare Products financial position better or worse than the average for theindustry?
Step by Step Answer:
Financial accounting
ISBN: 978-0132751124
9th edition
Authors: Walter T. Harrison Jr., Charles T. Horngren, C. William Thom