Here are comparative statement data for Dean Company and Gerald Company, two competitors. All balance sheet data are as of December 31, 2014, and December 31, 2013.

Dean Company Gerald Company 2014 2013 2014 2013 Net sales $350,000 $1,200,000 Cost of goods sold 175,000 648,000 Operating expenses 72,000 266,000 Interest expense 5,000 10,000 Income tax expense 22,000 54,000 Current assets 130,000 $100,000 700,000 $650,000 Plant assets (net) 400,000 270,000 1,000,000 750,000 Current liabilities 60,000 58,000 250,000 275,000 Long-term liabilities 50,000 72,000 200,000 150,000 Common stock 340,000 200,000 950,000 700,000 Retained earnings 80,000 40,000 300,000 275,000 Instructions

(a) Prepare a vertical analysis of the 2014 income statement data for Dean Company and Gerald Company.

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

AppendixLO1