Ratio of gross profit to net sales

Question

For the profitability analysis, compute McDonough Products' (a) ratio of gross profit to net sales (b) ratio of operating income to net sales, and (c) ratio of net income to net sales. Compare these figures with the industry averages. Is McDonough Products' profit performance better or worse than the average for the industry?

First column is the McDonough Products and the second is the Industry Average.

Net sales...............................................................................						$        700,000	100.0%
Cost of goods sold..............................................................						490,000	57.3
Gross profit..........................................................................						210,000	42.7
Operating expenses ...........................................................						175,000	29.4
Operating income................................................................						35,000	13.3
Other expenses....................................................................						7,000	2.5
Net income ..........................................................................						$          28,000	10.8%

Current assets......................................................................						$        471,200	72.1%
Fixed assets, net .................................................................						114,700	19.0
Intangible assets, net ..........................................................						21,080	4.8
Other assets.........................................................................						13,020	4.1
Total .....................................................................................						620,000	100.0%
Current liabilities .................................................................						240,560	0.5
Long-term liabilities ............................................................						135,160	21.0
Stockholders' equity............................................................						244,280	31.8
Total .....................................................................................						$        620,000	100.0%
Industry Average Current Ratio					1.53
Industry Average Total Debt to Total Assets					0.68