- Please refer to the following Income Statement and Balance Sheet (see attached picture):Prepare a vertical analysis for both the income statement and balance sheet.Write a paragraph comparing the company’s performance with the industry average.Compute the following ratios and comment on what the results mean when evaluating the company: Current ratio Gross profit percentage ratio Debt ratio Profit margin ratio RANDALL DEPARTMENT STORES, INC.Income Statement Compared with Industry AverageYear Ended December 31, 2018RANDALL DEPARTMENT STORES, INC.Balance Sheet Compared with Industry AverageDecember 31, 2018IndustryAverageIndustryAverageRandallRandallNet Sales Revenue$ 783,000100.0%$ 310,04070.9%Current AssetsCost of Goods Sold527,74265.8Property, Plant, and Equipment, Net119,60023.6Gross Profit255,25834.2Intangible Assets, Net7,3600.8Operating Expenses163,64719.7Other Assets23,0004.7Operating Income91,61114.5Total Assets$ 460,000100.0%Other Expenses6,2640.4Net Income$ 85,34714.1%Current Liabilities$ 210,68048.1%Long-term Liabilities103,96016.6Total Liabilities314,64064.7Stockholders' Equity145,36035.3Total Liabilities and Stockholders' Equity $ 460,000100.0%

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Prepare a vertical analysis for both the income statement and balance sheet. Write a paragraph comparing the company’s performance with the industry average. Compute the following ratios and comment on what the results mean when evaluating the company: Current ratio Gross profit percentage ratio Debt ratio Profit margin ratio

Prepare a vertical analysis for both the income statement and balance sheet. Write a paragraph comparing the company’s performance with the industry average. Compute the following ratios and comment on what the results mean when evaluating the company: Current ratio Gross profit percentage ratio Debt ratio Profit margin ratio

Fundamentals of Financial Management (MindTap Course List)

15th Edition

ISBN:9781337395250

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter4: Analysis Of Financial Statements

Section: Chapter Questions

Problem 24P: Income Statement for Year Ended December 31, 2018 (Millions of Dollars) Net sales 795.0 Cost of...

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Income Statement for Year Ended December 31, 2018 (Millions of Dollars) Net sales 795.0 Cost of goods sold 660.0 Gross profit 135.0 Selling expenses 73.5 EBITDA 61.5 Depreciation expenses 12.0 Earnings before interest and taxes (EBIT) 49.5 Interest expenses 4.5 Earnings before taxes (EBT) 45.0 Taxes (40%) 18.0 Net income 27.0 a. Calculate the ratios you think would be useful in this analysis. b. Construct a DuPont equation, and compare the companys ratios to the industry average ratios. c. Do the balance-sheet accounts or the income statement figures seem to be primarily responsible for the low profits? d. Which specific accounts seem to be most out of line relative to other firms in the industry? e. If the firm had a pronounced seasonal sales pattern or if it grew rapidly during the year, how might that affect the validity of your ratio analysis? How might you correct for such potential problems?
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