Comparative statement data for Farris Company and Ratzlaff Company
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|
|Cost of goods sold||1,080,490||241,000|
|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|
|Common stock, $10 par||500,000||500,000||120,000||120,000|
(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.