Here are comparative financial statement data for Duke Company and Lord Company, two competitors. All data are as of December 31, 2025, and December 31, 2024.

Instructions

a. Prepare 2025 income statements for both companies, then prepare a vertical analysis for each.

b. Comment on the relative profitability of the companies by computing the 2025 return on assets and the return on common stockholders' equity for both companies.

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Net sales Cost of goods sold Operating expenses Interest expense Income tax expense Current assets Plant assets (net) Current liabilities Long-term liabilities Common stock, $10 par Retained earnings Duke Company 2025 2024 $1,849,000 1,063,200 240,000 6,800 62,000 325,975 $312,410 526,800 500,000 66,325 113,990 500,000 172,460 75,815 90,000 500,000 146,595 Lord Company 2025 2024 $546,000 289,000 82,000 3,600 28,000 83,336 139,728 35,348 29,620 120,000 38,096 $ 79,467 125,812 30,281 25,000 120,000 29,998