Requirement #1
McDonough Products, Inc.
Common-Size Income Statement Compared to Industry Average
Year Ended December 31, 2010 McDonough Products Industry Average The Industry Average column is exactly the same as those on the requirements tab!
Net sales…………………………………………………… 100.00% 100.0%
Cost of goods sold……………………………………….. 70.00% 57.3
Gross profit…………………………….………………….. 30.00% 42.7
Operating expenses………………………………………. 25.00% 29.4
Operating income…………………………………………. 5.00% 13.3
Other expenses……………………………………………. 1.00% 2.5
Net income………………………………………………… 4.00% 10.8% McDonough Products, Inc.
Common-Size Balance Sheet Compared to Industry Average
Year Ended December 31, 2010 McDonough Products Industry Average
Current assets…………………………………………….. 76.00% 72.1% The Industry Average column is exactly the same as the requirements page!
Fixed assets, net………………………………………….. 18.50% 19.0
Intangible assets, net……………………………………… 3.40% 4.8
Other assets………………………………………………. 2.10% 4.1
Total assets……………………………………………….. 100.00% 100.00% Current liabilities………………………….……………….. 38.80% 47.2
Long-term liabilities……………………………………….. 21.80% 21
Stockholders’ equity………………………………………. 39.40% 31.8
Total liabilities and stockholders’ equity………………… 100.00% 100% Requirement #2 operating to net sales 5% 13.30% gross profit to net sales 30% 42.70% net income to net sales 4% 10.80%
The McDonough company is doing way less than the industry average
Requirement #3 (a) ratios of current assets and current liabilities to total assets and (b) ratio of stockholders’ equity to total assets