Prepare a vertical analysis of the 2015 income statement

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Reference no: EM13481449

Problem -1A

Comparative statement data for Farris Company and Ratzlaff Company, two competitors, appear below. All balance sheet data are as of December 31, 2015, and December 31, 2014.

	Farris Company		Ratzlaff Company
	2015	2014	2015	2014
Net sales	1,549,035		339,038
Cost of goods sold	1,080,490		241,000
Operating expenses	302,275		79,000
Interest expense	8,980		2,252
Income tax expense	54,500		6,650
Current assets	325,975	$312,410	83,336	$ 79,467
Plant assets (net)	521,310	500,000	139,728	125,812
Current liabilities	65,325	75,815	35,348	30,281
Long-term liabilities	108,500	90,000	29,620	25,000
Common stock, $10 par	500,000	500,000	120,000	120,000
Retained earnings	173,460	146,595	38096	29,998

Prepare a vertical analysis of the 2015 income statement data for Ferris Company and Ratzlaff Company in columnar form.
Comment on the relative probability of the companies by computing the return on assets and the return on common stockholders' equity for both companies.

Reference no: EM13481449

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