p 15 1 douglas company and maulder company 500602

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.