Here are comparative statement data for Brooke Company and Shields Com-pany, two competitors. All balance sheet data are as of December 31, 1998, and Decem-ber 31,1997 .

Instructions

(a) Prepare a vertical analysis of the 1998 income statement data for Brooke Companyand Shields Company.

(b) Comment on the relative profitability of the companies by computing the return onassets and the return on common stockholders' equity ratios for both companies.

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Brooke Company Shields Company 1998 1997 1998 1997 Net sales $250,000 Cost of goods sold 160,000 $1,200,000 720,000 Operating expenses 51,000 252,000 Interest expense 3,000 10,000 Income tax expense 11,000 65,000 Current assets 130,000 $110,000 700,000 $650,000 Plant assets (net) 305,000 270,000 800,000 750,000 Current liabilities 60,000 52,000 250,000 275,000 Long-term liabilities 50,000 68,000 200,000 150,000 Common stock 260,000 210,000 750,000 700,000 Retained earnings 65,000 50,000 300,000 275,000