Comparative income statement data for Manitou Ltd. and Muskoka Ltd., two competitors, are shown below for the year ended June 30, 2017.

Instructions
(a) Using vertical analysis, calculate the percentage of the base amount of the income statement for each company.
(b) Calculate the gross profit margin, profit margin, asset turnover, return on assets, and return on equity ratios for 2017 for each company.
(c) Using the information calculated in parts (a) and (b), compare the profitability of each company.
(d) Is your comparison in part (c) an intracompany comparison or an intercompany comparison? Explain.
TAKING IT FURTHER
How is your assessment of profitability affected by the differing sizes of the two companies, if at all? Explain.

Transcribed Image Text:

Manitou Muskoka S360,000 $1,400,000 Cost of goods sold Operating expenses Profit from operations Profit before income tax 160,000 ncome Additional information: Average total assets Average total shareholders' equity