Comparative statement data for Farris Company and Ratzlaff Company

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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 38,096 29,998

Instructions

(a)Prepare a vertical analysis of the 2015 income statement data for Farris Company and Ratzlaff Company in columnar form.

(b)Comment on the relative profitability of the companies by computing the return on assets and the return on common stockholders’ equity for both companies.

SKU: comparative-statement-data-for-farris-company-and-ratzlaff-company Category: