Top managers of Sharp 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 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?
Step by Step Answer:
Financial Accounting
ISBN: 978-0133427530
10th edition
Authors: Walter Harrison, Charles Horngren, William Thomas