P 15-1 Douglas Company and Maulder Company

P15-1)

 

Comparative statement data for Douglas Company and Maulder Company, two competitors,

appear below. All balance sheet data are as of December 31, 2009, and December 31,

2008.

                                                                Douglas Company                                    Maulder Company

                                                                 2009             2008                                      2009              2008

Net sales                              $1,549,035                                     $339,038

Cost of goods sold                 1,080,490                                       241,000

Operating expenses                  302,275                                         79,000

Interest expense                            8,980                                           2,252

Income tax expense                    54,500                                            6,650

Current assets                           325,975   $312,410                        83,336    $ 79,467

Plant assets (net)                      521,310      500,000                      139,728    125,812

Current liabilities                         65,325         75,815                        35,348      30,281

Long-term liabilities                   108,500         90,000                        29,620      25,000

Common stock, $10 par            500,000       500,000                      120,000    120,000

Retained earnings                     173,460       146,595                        38,096      29,998

 

Instructions

(a) Prepare a vertical analysis of the 2009 income statement data for Douglas Company and

Maulder 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.