Common-size statements, analy- sis of profitability, and compari- son with the industry Problem 18-3A Fixxit Ltd. has asked for your help in comparing the company's profit performance and financial position with the computer services industry average. The manager has given you the company's income statement and balance sheet, and also the following industry aver- age data for computer services companies: 2017 current assets are 64.1% of total assets FIXXIT LTD. Balance Sheet December 31, 2017 FIXXIT LTD. Income Statement For the Year Ended December 31, 2017 Industry Fixxit Ltd. Average Net sales $425,625 100.0% Cost of goods sold 250,375 53.2 Gross margin 175,250 46.8 Operating expenses 87,300 21.3 Operating income 87,950 25.5 Other expenses 20,500 5.2 Net income $ 67,450 20.3% Current assets Property and equip., net Other assets Total assets Current liabilities Long-term liabilities Shareholders' equity Total liabilities and shareholders' equity Fixxit Ltd. $162,750 85,250 6,000 $254,000 $112,500 62,500 79,000 Industry Average 62.5% 35.2 2.3 100.0% 42.5% 32.5 25.0 $254,000 100.0% 1102 Part 4 Analysis of Accounting Information Required 1. Prepare a two-column common-size income statement and a two-column common. size balance sheet for Fixxit Ltd. The first column of each statement should present Fixxit Ltd.'s common-size statement, and the second column should show the industry averages. 2. For the profitability analysis, compute Fixxit Ltd.'s (a) ratio of gross margin to net sales, (b) ratio of operating income to net sales, and (c) ratio of net income to net sales. Compare these figures to the industry averages. Is Fixxit Ltd.'s profit performance better or worse than the industry average? 3. For the analysis of financial position, compute Fixxit Ltd.'s (a) ratio of current assets to total assets, and (b) ratio of shareholders' equity to total assets. Compare these ratios to the industry averages. Is Fixxit Ltd.'s financial position better or worse than the industry averages