Question

Here are comparative statement data for Cullumber Company and Oriole Company, two competitors. All balance sheet...

Here are comparative statement data for Cullumber Company and Oriole Company, two competitors. All balance sheet data are as of December 31, 2017, and December 31, 2016. Cullumber Company Oriole Company 2017 2016 2017 2016 Net sales $1,856,000 $596,000 Cost of goods sold 1,079,000 298,000 Operating expenses 263,000 83,000 Interest expense 7,000 2,800 Income tax expense 75,000 34,000 Current assets 590,015 $565,462 150,838 $ 143,835 Plant assets (net) 953,508 905,000 252,908 227,720 Current liabilities 120,048 137,225 63,980 54,809 Long-term liabilities 206,322 162,900 53,612 45,250 Common stock, $10 par 905,000 905,000 217,200 217,200 Retained earnings 312,153 265,337 68,954 54,296 (a) Prepare a vertical analysis of the 2017 income statement data for Cullumber Company and Oriole Company. (Round all ratios to 1 decimal place, e.g. 2.5%.)

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Answer #1

(a) Prepare a vertical analysis of the 2017 income statement data for Cullumber Company and Oriole Company.

Cullumber company 2017 Oriole company 2017
Amount Percent Amount Percent
Net sales 1856000 100% 596000 100%
Cost of goods sold 1079000 58.1% 298000 50%
Gross profit 777000 41.9% 298000 50%
Operating expense 263000 14.2% 83000 13.9%
Operating income 514000 27.7% 215000 36.1%
Interet expense 7000 0.4% 2800 0.5%
Income before tax 507000 27.3% 212200 35.6%
Income tax 75000 4.0% 34000 5.7%
Net income 432000 23.3% 178200 29.9%
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