Instructions

The Good Tech Company and the Discount Computer Parts Company are competitors in manufacturing computer component parts. You are interested in comparing the two firms profitability. Their income statements are other information are noted below.

Good Tech Company is the larger company based on sales and total assets, so you decide to perform the following steps to compare and analyze the companies.

Required

Prepare in Excel (preferable) or Word responses to the following and upload your answer.

1. Prepare common-size income statements for each company. Comment on differences in the relative size of each line item.

2. Compute profit margin, return on assets, and return on stockholders equity for each company. Which company appears more profitable?

	Good Tech Company		Discount Computer parts
Sales	$ 745,363		$ 50,925
Cost of goods sold	512,363		32,744
Gross Profit	233,000		18,181
Selling, General, and Administrative Expenses	44,270		1,818
Other Operating Expenses	9,320		545
Interest Expense	18,640		146
Earnings before taxes	160,770		15,672
Taxes	56,269		5,485
Net Income	$ 104,501		$ 10,187
Average Total Assets	$ 950,007		$ 77,169
Average Stockholder's equity	$ 494,003		$ 56,334

Please answer all parts with work shown for the math. thank you