P18-2B Top managers of Geolab Exploration, Inc. have asked your help in comparing the company's profit performance and financial position with the average for the geological engi- neering industry. The accountant has given you the company's income statement and balance sheet and also the following data for the geological engineering industry. GEOLAB EXPLORATION, INC. Income Statement Compared with Industry Average Year Ended December 31, 20X3 GEOLAB EXPLORATION, INC Balance Sheet Compared with Industry Average December 31, 20X3 Industry Industry Geolab Average Geolab Average Net sales $988.000 100.0% Current assets. $501,000 74.4% Cost of goods sold. 653,000 65.9 Plant assets, net. 127,000 20.0 Gross profit 335,000 Operating expenses. Operating income. Other expenses. Net income. 2,000 $ 76.000 257,000 78.000 34.1 Intangible assets, net. 42,000 0.6 28.1 Other assets 13.000 5.0 6.0 Total... $683,000 100.0% 0.4 5.6% Current liabilities. $246.000 35.6% Long-term liabilities 144.000 19.0 Stockholders' equity. Total... 293,000 45.4 $683,000 100.0% Required 1. Prepare a two-column common-size income statement and balance sheet for Geolab. The first column of each statement should present Geolab's common-size statement, and the second column should show the industry averages. 2. For the profitability analysis, compute Geolab's

(a) ratio of gross profit to net sales.

(b) ratio of operating income (loss) to net sales, and

(c) ratio of net income (loss) to net sales. Compare these figures with the industry averages. Is Geolab's profit performance better or worse than the average for the industry? 3. For the analysis of financial position, compute Geolab'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 Geolab's financial position better or worse than average for the industry?