Question 1

Here are comparative statement data for Oriole Company and Ivanhoe Company, two competitors. All balance sheet data are as of December 31, 2017, and December 31, 2016.

Oriole Company Ivanhoe Company 2017 2016 2017 2016 Net sales $1,935,000 $552,000 Cost of goods sold 1,081,000 281,000 Operating expenses 254,000 90,000 Interest expense 7,800 2,900 Income tax expense 70,500 31,000 Current assets 378,131 $362,396 96,670 $ 92,182 Plant assets (net) 611,088 580,000 162,084 145,942 Current liabilities 76,937 87,945 41,004 35,126 Long-term liabilities 132,228 104,400 34,359 29,000 Common stock, $10 par 580,000 580,000 139,200 139,200 Retained earnings 200,054 170,050 44,191 34,798

Prepare a vertical analysis of the 2017 income statement data for Oriole Company and Ivanhoe Company. (Round all ratios to 1 decimal place, e.g. 2.5%.)

Condensed Income Statement For the Year Ended December 31, 2017 Oriole Company Ivanhoe Company Dollars Percent Dollars Percent Other Expenses and Losses Income From Operations Cost of Goods Sold Total Revenues Other Revenues and Gains Income Before Income Taxes Dividends Income Tax Expense Operating Expenses Total Operating Expenses Gross Profit Interest Expense Expenses Net Income / (Loss) Retained Earnings, January 1 Retained Earnings, December 31 Net Sales Sales Revenues Total Expenses $1,935,000 % $552,000 % Total Operating Expenses Income Before Income Taxes Total Revenues Total Expenses Other Revenues and Gains Net Sales Retained Earnings, January 1 Other Expenses and Losses Gross Profit Net Income / (Loss) Income From Operations Cost of Goods Sold Retained Earnings, December 31 Interest Expense Income Tax Expense Dividends Expenses Sales Revenues Operating Expenses 1,081,000 % 281,000 % Other Revenues and Gains Total Revenues Other Expenses and Losses Net Sales Retained Earnings, January 1 Income Before Income Taxes Net Income / (Loss) Interest Expense Expenses Total Expenses Dividends Retained Earnings, December 31 Sales Revenues Income From Operations Cost of Goods Sold Gross Profit Operating Expenses Total Operating Expenses Income Tax Expense 854,000 % 271,000 % Income Before Income Taxes Dividends Operating Expenses Total Operating Expenses Cost of Goods Sold Income Tax Expense Retained Earnings, December 31 Other Revenues and Gains Other Expenses and Losses Sales Revenues Total Revenues Income From Operations Retained Earnings, January 1 Net Income / (Loss) Interest Expense Expenses Net Sales Gross Profit Total Expenses 254,000 % 90,000 % Net Sales Other Revenues and Gains Other Expenses and Losses Gross Profit Income From Operations Expenses Cost of Goods Sold Total Revenues Income Before Income Taxes Net Income / (Loss) Interest Expense Income Tax Expense Operating Expenses Dividends Retained Earnings, January 1 Retained Earnings, December 31 Total Operating Expenses Sales Revenues Total Expenses 600,000 % 181,000 % Other Revenues and Gains Operating Expenses Retained Earnings, January 1 Total Revenues Other Expenses and Losses Net Sales Income Tax Expense Gross Profit Net Income / (Loss) Retained Earnings, December 31 Expenses Income From Operations Total Operating Expenses Income Before Income Taxes Dividends Sales Revenues Total Expenses Cost of Goods Sold Interest Expense Income Tax Expense Retained Earnings, January 1 Total Revenues Operating Expenses Total Expenses Gross Profit Dividends Total Operating Expenses Other Revenues and Gains Other Expenses and Losses Income Before Income Taxes Expenses Net Income / (Loss) Income From Operations Cost of Goods Sold Retained Earnings, December 31 Sales Revenues Net Sales Interest Expense 7,800 % 2,900 % Interest Expense Income Tax Expense Total Operating Expenses Dividends Expenses Net Sales Net Income / (Loss) Income Before Income Taxes Other Revenues and Gains Gross Profit Retained Earnings, January 1 Total Revenues Operating Expenses Other Expenses and Losses Total Expenses Retained Earnings, December 31 Income From Operations Cost of Goods Sold Sales Revenues 592,200 % 178,100 % Interest Expense Net Sales Dividends Retained Earnings, December 31 Sales Revenues Expenses Net Income / (Loss) Gross Profit Retained Earnings, January 1 Total Operating Expenses Total Expenses Income Before Income Taxes Income Tax Expense Operating Expenses Total Revenues Other Revenues and Gains Other Expenses and Losses Income From Operations Cost of Goods Sold 70,500 % 31,000 % Income From Operations Expenses Cost of Goods Sold Total Operating Expenses Operating Expenses Interest Expense Income Tax Expense Income Before Income Taxes Retained Earnings, December 31 Other Expenses and Losses Net Income / (Loss) Dividends Sales Revenues Retained Earnings, January 1 Total Expenses Total Revenues Net Sales Gross Profit Other Revenues and Gains $521,700 % $147,100 %

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Compute the 2017 return on assets and the return on common stockholders equity for both companies. (Round all ratios to 1 decimal place, e.g. 2.5%.)

Oriole Company Ivanhoe Company Return on assets % % Return on common stockholders equity % %

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