Comparative statement data for Brooks Company and Shields Company, two competitors, appear below. All balance sheet data are as of December 31, 1996, and December 31, 1995.

\section*{Instructions}

(a) Prepare a vertical analysis of the 1996 income statement data for Brooks Company and Shields Company in columnar form.

(b) Comment on the relative profitability of the companies by computing the return on assets and the return on common stockholders' equity ratios for both companies.

Transcribed Image Text:

Brooks Company 1996 1995 Net sales $250,000 Cost of goods sold 160,000 Shields Company 1996 $1,200,000 720,000 1995 Operating expenses 51,000 252,000 Interest expense 3,000 10,000 Income tax expense 11,000 65,000 Current assets 130,000 $110,000 700,000 $650,000 Plant assets (net) 305,000 270,000 800,000 750,000 Current liabilities 60,000 52,000 250,000 275,000 Long-term liabilities 50,000 68,000 200,000 150,000 Common stock 260,000 210,000 750,000 700,000 Retained earnings 65,000 50,000 300,000 275,000