Here are comparative statement data for Chen Company and Couric Company,two competitors. All balance sheet data are as of December 31, 1998, and December 31,1997.

Instructions

(a) Prepare a vertical analysis of the 1998 income statement data for Chen Company andCouric 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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Chen Company Couric Company 1998 1997 1998 1997 Net sales $1,549,035 $339,038 Cost of goods sold 1,080,490 238,006 Operating expenses 302,275 79,000 Interest expense 6,800 1,252 Income tax expense 47,840 7,740 Current assets 325,975 $312,410 83,336 $ 79,467 Plant assets (net) 521,310 500,000 139,728 125,812 Current liabilities 66,325 75,815 35,348 30,281 Long-term liabilities 108,500 90,000 29,620 25,000 Common stock, $10 par 500,000 500,000 120,000 120,000 Retained earnings 172,460 146,595 38,096 29,998