Here are comparative statement data for Jimmy Paige Company and Robert Plant Company, two competitors. All balance sheet data are as of December 31, 2002, and December 31, 2001.

Instructions

(a) Prepare a vertical analysis of the 2002 income statement data for Paige Company and Plant Company.

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

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Jimmy Paige Company Robert Plant Company 2002 2001 2002 2001 Net sales $350,000 $1,400,000 Cost of goods sold 180,000 Operating expenses 51,000 720,000 272,000 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) 405,000 270,000 1,000,000 750,000 Current liabilities 60,000 52,000 250,000 275,000 Long-term liabilities 50,000 68,000 200,000 150,000 Common stock 360,000 210,000 950,000 700,000 Retained earnings 65,000 50,000 300,000 275,000