Top managers of
McDonough 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:
McDonough Products, Inc.
Income Statement Compared with Industry Average
Year Ended
December 31, 2010
McDonough “Industry
Average”
Net sales……………………………………………………………………. $700,000 100.0%
Cost of goods sold…………………………………………………….. 490,000 57.3
Gross profit……………………………………………………………….. 210,000 42.7
Operating expenses ………………………………………………….. 175,000 29.4
Operating income………………………………………………………. 35,000 13.3
Other expenses………………………………………………………….. 7,000 2.5
Net income ……………………………………………………………….. $28,000 10.8%
McDonough Products, Inc.
Balance Sheet Compared with Industry Average
December 31, 2010 McDonough “IndustryAverage”
Current assets……………………………………………………………. $471,200 72.1%
Fixed assets, net ……………………………………………………….. 114,700 19.0
Intangible assets, net …………………………………………………. 21,080 4.8
Other assets………………………………………………………………. 13,020 4.1
Total …………………………………………………………………………. 620,000 1.0
Current liabilities ……………………………………………………….. 240,560 0.5
Long-term liabilities …………………………………………………… 135,160 21.0
Stockholders’ equity…………………………………………………… 244,280 31.8
Total …………………………………………………………………………. $620,000 100.0%
Requirements
1. Prepare a common-size income statement and balance sheet for McDonough Products. The first column of each statement should present McDonough Products’ common-size statement, and the second column should show the industry averages.
2. For the profitability analysis, compute McDonough 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. Compare these figures with the industry averages. Is McDonough Products’ profit performance better or worse than the average for the industry?
3. For the analysis of financial position, compute McDonough 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 McDonough Products’ financial position better or worse than the average for the industry?
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Achiever Papers is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.
Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Dissertation Writing Service Works
First, you will need to complete an order form. It's not difficult but, if anything is unclear, you may always chat with us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order form
Once we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignment
As soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download