Alto Auto Glass has asked your help in comparing the company's profit performance and financial position with the average for the auto parts retail industry. The proprietor has given you the company's income statement and balance sheet and also the industry average data for retailers of auto parts.

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1. Prepare a two-column common-size income statement and a two-column common-size balance sheet for Alto. The first column of each statement should present Alto's common-size statement, and the second column should show the industry averages.
2. For the profitability analysis, compute Alto's

(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 Alto's profit performance better or worse than the industry average?
3. For the analysis of financial position, compute Alto's

(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 Alto's financial position better or worse than the industry averages?
Using the statement of cash flows for decision making (Obj. 4)

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ALTO AUTO GLASS INCOME STATEMENT COMPARED WITH INDUSTRY AVERAGE YEAR ENDED DECEMBER 31, 19X6 ALTO AUTO GLASS BALANCE SHEET COMPARED WITH INDUSTRY AVERAGE DECEMBER 31, 19X6 Industry Industry Alto Average Aito Average Net sales.... $781,000 100.0% Current assets. $350,000 70.9% Cost of goods sold. 497,000 65.8 Fixed assets, net. 74,000 23.6 Gross profit.... 284,000 34.2 Intangible assets, net. 4,000 0.8 Operating expenses 163,000 19.7 Other assets 22,000 4.7 Operating income. 121,000 14.5 Total........ $450,000 100.0% Other expenses 5,000 0.4 Current liabilities. $207,000 48.1% Net income.. $116,000 14.1% Long-term liabilities. 62,000 16.6 Stockholders' equity. 181,000 35.3 Total.................. $450,000 100.0%