Computer Doctor Ltd. has asked for your help in comparing the company’s profit performance and financial position with the computer services industry average. The manager has given you the company’s income statement and balance sheet, and also the following industry average data for similar companies:

Required

1. Prepare a two-column common-size income statement and a two-column common-size balance sheet for Computer Doctor Ltd. The first column of each statement should present Computer Doctor Ltd.’s common-size statement, and the second column should show the industry averages. Round all answers to one decimal place.

2. For the profitability analysis, compare each of Computer Doctor Ltd.’s (a) ratio of gross margin to net sales, (b) ratio of operating income to net sales, and (c) ratio of net income to net sales. Compare these figures to the industry averages. Is Computer Doctor Ltd.’s profit performance better or worse than the industry average? 

3. For the analysis of financial position, compare each of Computer Doctor Ltd.’s

(a) Ratio of current assets to total assets, 

(b) Ratio of shareholders’ equity to total assets to the industry averages. Is Computer Doctor Ltd.’s financial position better or worse than the industry averages?

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COMPUTER DOCTOR LTD. Income Statement For the Year Ended December 31, 2020 Computer Doctor Ltd. Industry Average Net sales $425,625 100.0% Cost of goods sold 250,375 53.2 Gross margin 175,250 46.8 Operating expenses 87,300 21.3 Operating income 87,950 25.5 Other expenses 20,500 5.2 Net income $ 67,450 20.3%