Roost Department Stores, Inc

Balance Sheet Compared with Industry Average

December 31, 2016

	Roost	Industry Average
Current Assets	$316,780	70.9%
FIxed Assets, Net	120,320	23.6
Intangible Assets, Net	7,990	0.8
Other Assets	24,910	4.7
Total Assets	$470,000	100.0%
Current Liabilities	$217,140	48.1%
Long term Liabilities	104,340	16.6
Total Liabilities	321,480	64.7
Stockholders' Equity	148,520	35.3
Total Liabilities and Stockholders's Equity	470,000	100.0%

Roost Department Stores, Inc.

Income Statment Compared with Industry Average

Year Ended December 31,2016

	Roost	Industry Average
Net Sales	$779,000	100.0%
Costs of Goods Sold	526,604	65.8
Gross Profit	252,396	34.2
Operating Expenses	163,590	19.7
Operating Income	88,806	14.5
Other Expenses	5,453	.04
Net Income	$83,353	14.1%

The RoostDepartment Stores, Inc. chief executive officer (CEO) has asked you to compare the company's profit performance and financial position with the averages 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.

Requirement 1. Prepare a common-size income statement and balance sheet for Roost. The first column of each statement should present Roost's common-size statement, and the second column, the industry averages.

Begin by preparing the common-size income statement for Roost. (Round your answers to one decimal place, X.X%.)

Roost Department Stores, Inc.
Common-Size Income Statement
Year Ended December 31, 2016
	Roost		Industry Average
Net Sales		%	100.0	%
Cost of Goods Sold		%	65.8	%
Gross Profit		%	34.2	%
Operating Expenses		%	19.7	%
Operating Income		%	14.5	%
Other Expenses		%	0.4	%
Net Income		%	14.1	%

Prepare a common-size balance sheet for Roost (Round your answers to one decimal place, X.X%.)

Roost Department Stores, Inc.
Common-Size Balance Sheet
December 31, 2016
	Roost		Industry Average
Current Assets		%	70.9 %
Fixed Assets, Net		%	23.6 %
Intangible Assets, Net		%	0.8 %
Other Assets		%	4.7 %
Total Assets		%	100.0%
Current Liabilities		%	48.1 %
Long-term Liabilities		%	16.6 %
Total Liabilities		%	64.7 %
Stockholders' Equity		%	35.3 %
Total Liabilities and Stockholders' Equity		%	100.0%

Requirement 2. For the profitability analysis, compute Roost's (a) gross profit percentage and (b) profit margin ratio. Compare these figures with the industry averages. Is Roost's profit performance better or worse than the industry average?

(a) Compute Roost's gross profit percentage. (Round the gross profit percentage to one decimal place, X.X%.)

Gross profit percentage = (select correct answer: Gross profit / Net sales or Gross profit / Total assets or Net income /Gross profit or Net income / Net sales) =________%

(b) Compute Roost's profit margin ratio. (Round the profit margin ratio to one decimal place, X.X%.)

Profit margin ratio = (select correct answer: Net income / Net sales or Net income / Stockholders' equity or Net income / Total assets or Net sales / Total assets) =_________%

Compare these figures with the industry averages. Is Roost's profit performance better or worse than the industry average? Roost's gross profit percentage is (select correct answer: better or worse ) than the industry averages and profit margin ratio is (select correct answer: better or worse ) than the industry average.

Requirement 3. For the analysis of financial position, compute Roost's (a) current ratio and (b) debt to equity ratio. Compare these ratios with the industry averages. Assume the current ratio industry average is 1.47, and the debt to equity industry average is 1.83. Is Roost's financial position better or worse than the industry averages?

(a) Compute Roost's current ratio. (Round the ratio to two decimal places, X.XX.)

Current ratio = (select correct answer: Net income / Total current assets or Total assets / Total liabilities or Total current assets / Net income or Total current assets / Total current liabilities or Total current assets / Total liabilities or Total current liabilities / Total current assets) = _________

(b) Compute Roost's debt to equity ratio. (Round the ratio to two decimal places, X.XX.)

Debt to equity ratio = (select correct answer: Total current liabilities / Total current assets or Total current liabilities / Total equity or Total equity / Total liabilities or Total liabilities / Total assets or Total liabilities / Total equity) = _______

Compare these ratios with the industry averages. Assume the current ratio industry average is 1.47 and the debt to equity industry average is 1.83. Is Roost's financial position better or worse than the industry averages?

Roost's current ratio is (select correct answer: close to or significantly better than or signiicantly worse than) the industry average.

The debt to equity ratio is (select correct answer:close to or significantly better than or significantly worse than) than the industry average.