Franklin 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 Franklin Department Stores. The first column of each statement should present Franklin Department Stores' common-size statement, while the second column should present the industry averages.
2. For the profitability analysis, compute Franklin Department Stores' (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 Franklin Department Stores' profit performance better or worse than the industry average?
3. For the analysis of financial position, compute Franklin Department Stores' (a) ratio of current assets to total assets and (b) ratio of stockholders' equity to total assets. Compare these ratios with the industry averages. Is Franklin Department Stores' financial position better or worse than the industry averages?

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Franklin Department Stores, Inc. Income Statement Compared with Industry Average For Year Ended December 31 Net Cost of goods s Gross profit Operating expenses Operatingi Other e Net i Industry Franklin Average $779,000 100.0% 527,383 65.8% $251,617 34.2% 161,253 19.6% $90,364 14.6% 7,011 0.6% $83,353 14.0% Franklin Department Stores, I nc. Balance Sheet Compared with Industry Average As of December 31 Franklin $332,220 128,380 5,880 Industry Average 71.0% 23.7% 0.8% 4.5% 100.0% Fixed assets, net Intangible assets, net Other a Total a Current liabilities Long-term liabilities Stockholders' equity Total liabilities and stockholders' equity $490,000 110,740 151.900 $490,000 16.6% 35.2% 100.0%