XACC 280 P15-1 Comparative statement data for Douglas Company and Maulder Company, two competitors, appear

XACC 280 P15-1 Comparative statement data for Douglas Company and Maulder Company, two competitors, appear

Axia College of University of Phoenix (UoP)

Principles of Accounting: Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2008). Financial Accounting (6th ed.). Hoboken, NJ: Wiley.

                                                                                       SOLUTION

Problem P15-1(6 Points)

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	15,49,035			3,39,038
Cost of goods sold	10,80,490			2,41,000
Operating expenses	3,02,275			79,000
Interest expense	8,980			2,252
Income tax expense	54,500			6,650
Current assets	3,25,975	3,12,410		83,336	79,467
Plant assets (net)	5,21,310	5,00,000		1,39,728	1,25,812
Current liabilities	65,325	75,815		35,348	30,281
Long-term liabilities	1,08,500	90,000		29,620	25,000
Common stock, $10 par	5,00,000	5,00,000		1,20,000	1,20,000
Retained earnings	1,73,460	1,46,595		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.  SOLUTION