P14-35A Comprehensive analysis (Learning Objectives 2, 3, & 4) Block Department Stores' chief executive officer (CEO) has asked you to compare the company's profit performance and financial position with the average for the industry. The CEO has given you the company's income statement and balance sheet, as well as the industry average data for retailers. Block Department Stores, Inc Income Statement Compared with Industry Average For the Year Ended December 31 Block 6 Sales revenues 7 : Less: Cost of goods s 8 Gross 9 Less 10 Operating income 11 Less: Interest expense 12 Income before income taxes 13 Less: Income taxe 14 Net income 526,286 657% 1,173 0.5% 5,083 0.3% Block Department Stores, Inc Balance Sheet C ed with Industry Average As of December 31 s in Block Indu Assets 7 Current assets 8 Fixed assets, net 9 Intangible as 10 Other assets 1 Total assets 12 13 14 Current liabilit 15 Long-term liabiliti 6 Total liabilities 17 18 19 20 21 Total liabilities and 117,760 5,980 23,920 23.7% 0.7% 4.7% 104,880 16.7% al common stockholders' equity 141,680 100.0% Requirements 1. Prepare a common-size income statement and balance sheet for Block Department Stores. The first column of eaclh statement should present Block Department Stores common-size statement, while the second column should present the industry averages 2. For the profitability analysis, compute Block Department Stores' (a) ratio of gross profit to sales, (b) ratio of operating income to sales, and (c) ratio of net income to sales. Compare these figures with the industry averages. Is Block Department Stores profit performance better or worse than the industry average? 3. For the analysis of financial position, compute Block Department Stores' (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 Block Department Stores' financial position better or worse than the industry averages