The following percentages apply to Finch Company for 2018 and 2019:

	2019				2018
Sales		100.0	%			100.0	%
Cost of goods sold		61.1				63.9
Gross margin		38.9				36.1
Selling and administrative expense		26.3				20.4
Interest expense		2.7				2.0
Total expenses		29.0				22.4
Income before taxes		9.9				13.7
Income tax expense		5.4				7.1
Net income		4.5	%			6.6	%

Required

Assuming that sales were $505,000 in 2018 and $595,000 in 2019, prepare income statements for the two years.

FINCH COMPANY
Income Statements
	2019	2018
Sales
Cost of goods sold
Gross margin	0	0
Selling and administrative expenses
Interest expense
Total expenses	0	0
Income before taxes
Income tax expense
Net income	$0	$0

Part 2

Selected data for Munoz Company for 2018 follows:

Earnings (net income)					$	185,000
Preferred stock (13,000 shares at $40 par, 2%)					$	520,000
Common stock (44,500 shares no par, market value $50)						519,000
Retained earnings						581,500
					$	1,620,500
Less: Treasury stock
Preferred (2,000 shares)	$	54,000
Common (2,000 shares)		21,000				75,000
Total stockholders equity					$	1,545,500

Required

Calculate the Munoz Companys ratios. (Round intermediate calculations and final answer to 2 decimal places.)

Price-earnings ratio
Return on equity		%

Calculate the Munoz Companys ratios. (Round intermediate calculations and final answer to 2 decimal places.)