Top managers of Walsh 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 Walsh Products. The first column of each statement should present Walsh Products common-size statement, and the second column should show the industry averages.
2. For the profitability analysis, compute Walsh 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.
Compare these figures with the industry averages. Is Walsh Products profit performance better or worse than the average for the industry?
3. For the analysis of financial position, compute Walsh Products
(a) Ratios of current assets and current liabilities to total assets
(b) Ratio of stockholders equity to total assets.
Compare these ratios with the industry averages. Is Walsh Products financial position better or worse than the average for theindustry?
Step by Step Answer:
Financial accounting
ISBN: 978-0136108863
8th Edition
Authors: Walter T. Harrison, Charles T. Horngren, William Bill Thomas