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| Problem -1A |
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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.
|
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Farris Company |
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Ratzlaff Company
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|
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2015 |
|
2014 |
|
2015 |
|
2014 |
| Net sales |
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1,549,035 |
|
|
|
339,038 |
|
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| Cost of goods sold |
|
1,080,490 |
|
|
|
241,000 |
|
|
| Operating expenses |
|
302,275 |
|
|
|
79,000 |
|
|
| Interest expense |
|
8,980 |
|
|
|
2,252 |
|
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| Income tax expense |
|
54,500 |
|
|
|
6,650 |
|
|
| Current assets |
|
325,975 |
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$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 |
|
38096 |
|
29,998 |
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Prepare a vertical analysis of the 2015 income statement data for Ferris Company and Ratzlaff Company in columnar form.
Comment on the relative probability of the companies by computing the return on assets and the return on common stockholders' equity for both companies.
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