Question

Project The required tasks are detailed below: (1) Prepare vertical common-size income statements and balance sheets for both companies. Note: Use "Total Sales" and "Total Assets" as the denominators for income statement and balance sheet, respectively. Compute for 2018, 2017, and 2016. (2) Prepare horizontal analysis on income statements and balance sheets for both companies. (3) Prepare ratio analyses (for 2018, 2017, and 2016) for both companies. You should include the following ratios in your computations: Profitability ratios o Gross Profit margin O Profit margin O Return on assets o Return on equity Productivity o Accounts Receivable Turnover o Average Collection Period o Inventory Turnover o days inventory outstanding o PPE Turnover o Asset Turnover Solvency o Debt-to-equity o Times interest earned o Return on Financial leverage Liquidity O Current Ratio Quick Ratio o Working capital • (3) Comment on the analytical results of the two companies based on your work in excel. In addition to contrasting the ratios between the companies, you should interpret the numbers and make suggestions as to why the ratio of one company might be higher/lower than the other Note: General discussions of the ratios are given in our textbook, which will help you structure your comments.

Answer 1

Gross profit margin= Revenue-Cost of goods sold

Revenue

108203- 71043

108203

= 34.342855%

Profit Margin = net income*100

revenue

11,121*100

108203

=10.275

Return on assets=   net income

average total assets

  

11121

44403

=25.045%