Ambrose Department Stores' chief executive officer (CEO) has asked you to compare the company's profit performance and financial position with the average for the industry. The CEO has given you the company's income statement and balance sheet, as well as the industry average data for retailers.

Requirements
1. Prepare a common-size income statement and balance sheet for Ambrose Department Stores. The first column of each statement should present Ambrose Department Stores' common-size statement, while the second column should present the industry averages.
2. For the profitability analysis, compute Ambrose Department Stores' (a) ratio of gross profit to sales, (b) ratio of operating income to sales, and (c) ratio of net income to sales. Compare these figures with the industry averages. Is Ambrose Department Stores' profit performance better or worse than the average for the industry?
3. For the analysis of financial position, compute Ambrose Department Stores' (a) ratios of current assets to total assets and (b) ratio of stockholders' equity to total assets. Compare these ratios with the industry averages. Is Ambrose Department Stores' financial position better or worse than the industry averages?

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Ambrose Department Stores, Inc. Income Statement Compared with Industry Average For the Year Ended December 31 (amounts In thousands) Ambrose 784,000 527,632 256,368 163,856 92,512 784 91,728 7,056 84,672 Industry Average 100.0% 65.9% 34.1% 6 Sales revenues 7 Less: Cost of goods sold 8 Gross profit Less: Operating expenses 10 Operating Income 11 Less: Interest expense 12 Income before Income taxes 13 Less: Income tax expense 14 Net Income 15 19.4% 14.7% 0.4% 14.3% 0.4% 13.9% Ambrose Department Stores, Inc. Balance Sheet Compared with Industry Average As of December 31 (amounts In thousands) Ambrose Industry Average Assets Current assets 8 Fixed assets, net 9 Intangible assets, net 10 Other assets 11 Total assets 324,000 122,880 9,120 24,000 480,000 70.8% 23.8% 0.8% 4.6% 100.0% 12 13 14 Current llabilitles 15 Long-term llabilities 16 Total llabilitles 17 Llablitles 224,640 105,600 330,240 48.1% 16.5% 64.6% Stockholders' equlty 18 19 Total common stockholders' equity 149,760 35.4% 20 21 Total llabilitles and equity 22 IS 480,000 100.0%