Pathfinder, Inc., has asked you to compare the company’s profit performance and financial…
Pathfinder, Inc., has asked you to compare the company’s profit performance and financial position with the industry average. The proprietor has given you the company’s income statement and balance sheet as well as the industry average data for retailers.
1. Prepare a common-size income statement and balance sheet for Pathfinder. The first column of each statement should present Pathfinder’s common-size statement, and the second column, the industry averages. pp. 691–693)
2. For the profitability analysis, compute Pathfinder’s a) ratio of gross profit to net sales, b) ratio of operating income to net sales, and c) ratio of net income to net sales. Compare these figures with the industry averages. Is Pathfinder’s profit performance better or worse than the industry average? p. 704)
3. For the analysis of financial position, compute Pathfinder’s a) ratio of current assets to total assets, and b) ratio of stockholders’ equity to total assets. Compare these ratios with the industry averages. Is Pathfinder’s financial position better or worse than the industry averages? pp. 692–693)