Here are comparative statement data for Silver Company and Gold Company, two competitors. All balance sheet data are as of December 31, 2012, and December 31, 2011.
| Silver Company | Gold Company | |||
| 2012 | 2011 | 2012 | 2011 | |
| Net sales | $1,849,000 |
| $546,000 |
|
| Cost of goods sold | 1,063,200 |
| 289,000 |
|
| Operating expenses | 240,000 |
| 82,000 |
|
| Interest expense | 6,800 |
| 3,600 |
|
| Income tax expense | 62,000 |
| 28,000 |
|
| Current assets | 325,975 | $312,410 | 83,336 | $ 79,467 |
| Plant assets (net) | 526,800 | 500,000 | 139,728 | 125,812 |
| Current liabilities | 66,325 | 75,815 | 35,348 | 30,281 |
| Long-term liabilities | 113,990 | 90,000 | 29,620 | 25,000 |
| Common stock, $10 par | 500,000 | 500,000 | 120,000 | 120,000 |
| Retained earnings | 172,460 | 146,595 | 38,096 | 29,998 |
Instructions
(a) Prepare a vertical analysis of the 2012 income statement data for Silver Company and Gold Company.
(b) Comment on the relative profitability of the companies by computing the 2012 return on assets and the return on common stockholders’ equity ratios for both companies
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