Top managers of Sharp 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:

Requirements
1. Prepare a common-size income statement and balance sheet for Sharp Products. The first column of each statement should present Sharp Products€™ common-size statement, and the second column should show the industry averages.
2. For the profitability analysis, compare Sharp Products€™
(a) Ratio of gross profit to net sales,
(b) Ratio of operating income to net sales,
(c) Ratio of net income to net sales with the industry averages. Is Sharp Products€™ profit performance better or worse than the average for the industry?
3. For the analysis of financial position, compare Sharp Products€™
(a) Ratios of current assets and current liabilities to total assets
(b) Ratio of stockholders€™ equity to total assets with the industry averages. Is Sharp Products€™ financial position better or worse than the average for theindustry?

A1 Sharp Products, Inc. Income Statement Compared with Industry Average Year Ended December 31, 2014 Sharp $ 800,000 Industry Average 3 Net sales 4 Cost of goods sold 5 Gross profit 6 Operating expenses 552,000 248,000 184,000 64,000 4,000 100.0% 57.3 42.7 9.4 13.3 2.5 10.8% Operating income Other expenses Net income S 60,000 A1 Sharp Products, Inc. Balance Sheet Compared with Industry Average December 31, 2014 Sharp Industry Average $ 377,600 113,920 19,200 129,280 640,000 72.1% 19.0 4.8 4.1 100.0% 3 Current assets Fixed assets, net 5 Intangible assets, net 6 Other assets Total Current liabilities 0 Long-term liabilities 11 Stockholders' equity 300,800 134,400 204,800 47.2% 21.0 31.8 100.0% 12 Total 640,000