P15-1A Comparative statement data for Douglas Company and Maulder Company, two c
ID: 2442889 • Letter: P
Question
P15-1AComparative statement data for Douglas Company and Maulder Company, two competitors, appear below. All balance sheet data are as of December 31, 2009, and December 31, 2008.
Douglas Company Maulder Company
2009 2008 2009 2008
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
Complete the vertical analysis of the 2009 income statement data for Douglas Company and Maulder Company in columnar form. (Round percentages to 1 decimal place, e.g. 10.5.)
Condensed Income Statements
For the Year Ended December 31, 2009
Douglas Company
Maulder Company
Dollars
Percent
Dollars
Percent
$ % $ %
%
%
% %
%
%
% %
%
%
% %
%
%
$
%
$
%
Comment on the relative profitability of the companies by computing the return on assets and the return on common stockholders' equity ratios for both companies. (Round percentages to 1 decimal place, e.g. 10.5.)
Douglas Company appears to be . It has relative gross profit, income from operations, income before taxes, and net income.
Douglas's return on assets of % is than Maulder's return on assets of %.
Also, Douglas's return on common stockholders' equity of % is than Maulder's return on stockholders' equity of %.
Explanation / Answer
Vertical Analysis Net Sales 1888073 Douglas Company 0.820431731 Maulder Company 0.179568269 Cost Of Goods Sold 1321490 Douglas Company 0.228738015 Maulder Company 0.256557371 Operating Expenses : 381275 Douglas Company 0.792800472 Maulder Company 0.207199528 Interest Expense : 11232 Douglas Company 0.799501425 Maulder Company 0.200498575 Income Tax Expense: 61150 Douglas Company 0.891251022 Maulder Company 0.108748978 Current Assets : 2009 409311 Douglas Company 0.796399315 Maulder Company 0.203600685 2008 391877 Douglas Company 0.797214432 Maulder Company 0.202785568 Plant Assets 2009 661038 Douglas Company 0.788623347 Maulder Company 0.211376653 2008 625812 Douglas Company 0.798961989 Maulder Company 0.201038011 Current Liabilities : 2009 100673 Douglas Company 0.648883017 Maulder Company 0.351116983 2008 106096 Douglas Company 0.714588674 Maulder Company 0.285411326 Long Term Liabilities : 2009 138120 Douglas Company 0.785548798 Maulder Company 0.214451202 2008 115000 Douglas Company 0.782608696 Maulder Company 0.217391304 Common Stock : 2009 620000 Douglas Company 0.806451613 Maulder Company 0.193548387 2008 620000 Douglas Company 0.806451613 Maulder Company 0.193548387
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