5.

With the common-sized income statements shown that compare Small Supply to the industry average, identify weaknesses the company has.

Small Supply Industry average

Sales 100% 100%

cost of goods sold 34.8 31.2

gross profit 65.2% 68.80%

selling expenses 13.70% 13.90%

administrative expenses 12.1 11.8

total operating expenses 25.80% 25.70%

income from operations 39.4% 43.10%

other income 2.4 1.9

41.80% 45.00%

other expense (interest) 1.5 1.1

income tax before income tax 40.30% 43.9%

Incometax expense 14.1 15.4

net income 26.20% 28.50%