Top managers of O’Hare Products, Inc., have asked for your

Top managers of O’Hare Products, Inc., have asked for your help in comparing the company’s profit performance and financial position with the average for the industry. The accountant has given you the company’s income statement and balance sheet and also the following data for the industry:

Top managers of O’Hare Products, Inc., have asked for your

Requirements
1. Prepare a common-size income statement and balance sheet for O’Hare Products. The first column of each statement should present O’Hare Products’ common-size statement, and the second column should show the industry averages.
2. For the profitability analysis, compare O’Hare 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 O’Hare Products’ profit performance better or worse than the average for the industry?
3. For the analysis of financial position, compute O’Hare 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 O’Hare Products’ financial position better or worse than the average for theindustry?

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