YOU ARE COMPARING 2 DIFFERENT COMPANIES. THE $$$$ OF ONE COMPANY HAVE NOTHING TO DO WITH THE DOLLARS OF THE OTHER COMPANY THAT'S WHY WE USE RATIOS. WE COMPARE THE RATIOS. DO NOT TRY TO COMPARE THE DOLLARS. Income Statement Company ABC XYC Incorp Balance Sheet Company ABC Sales 143,000 380,000 Assets Cost of Goods Sold 85,800 203,000 Cash Gross Profit 57,200 177,000 Accounts Receivable Gross Margin Inventory Prepaids SG&A Operating Income Interest Income before Tax Income Tax 23,000 98,000 Total Current Assets XYC Incorp 16,000 10,000 12,000 38,000 14,500 42,000 3,400 5,000 45,900 95,000 34,200 79,000 2,000 3,000 PP&E, net of Depreciation 230,000 510,000 32,200 76,000 Total Assets 275,900 605,000 8,050 17,000 Net Income 24,150 59,000 Liabilities Profit Margin Accounts Payable 14,230 38,000 Accrued Expenses 2,300 15,000 Current ratio Total Current Liabilities 16,530 53,000 Notes Payable 113,370 162,000 Total Liabilities 129,900 215,000 Profitability Effidency Leverage Average Collection Period Number of Days Sales in Inventory Dupont Net Income/Sales Sales/Assets Assets/Equity rule of thumb 15% to 25% Debt Ratio Debt to Equity Effective Tax Rate Stockholders Equity Common Stock 56,000 90,000 Retained Earnings 90,000 300,000 Total Stockholders Equity 146,000 390,000 Retum on Equity Total Liabilities & Stockholders Equity 275,900 605,000