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blackgirlsrock
Dec 1, 2012, 02:43 PM
ACCT 212 : Course Project 2
"Learning Objectives : Preparing common-size statements; analyzing
profitability; making comparisons with the industry"

Top managers of McDonough Products, Inc. have asked for your help in comparing the company’s profit performance and financial position with the average for the industry. The accountant has given you the company’s income statement and balance sheet and also the following data for the industry. The problem is that McDonough is in dollars and the Industry Average is in percentages. To complete the analysis you will need to convert McDonoughs dollar amounts to percentages.

McDonough Products, Inc.
Income Statement Compared with Industry Average
Year Ended December 31, 2010
McDonough "Industry
Average"
Net sales... $700,000 100.0%
Cost of goods sold... 490,000 57.3
Gross profit... 210,000 42.7
Operating expenses... 175,000 29.4
Operating income... 35,000 13.3
Other expenses... 7,000 2.5
Net income... $28,000 10.8%

McDonough Products, Inc.
Balance Sheet Compared with Industry Average
December 31, 2010
McDonough "Industry
Average"
Current assets... $471,200 72.1%
Fixed assets, net... 114,700 19.0
Intangible assets, net... 21,080 4.8
Other assets... 13,020 4.1
Total... 620,000 100.0%

Current liabilities... 240,560 47.2%
Long-term liabilities... 135,160 21.0
Stockholders’ equity... 244,280 31.8
Total... $620,000 100.0%

Industry Average Current Ratio 1.53

Industry Average Total Debt to Total Assets 0.68

See red triangle for helpful hints.


Requirements
1. Prepare a common-size income statement and balance sheet for McDonough Products. The first column of each statement should present McDonough Products’ common-size statement, and the second column should show the industry averages.
2. For the profitability analysis, compute McDonough Products’ (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 McDonough Products’ profit performance better or worse than the average for the industry?
3. For the analysis of financial position, compute McDonough Products’ (a) Current ratio and (b) Debt ratio. Compare these ratios with the industry averages. Is McDonough Products’ financial position better or worse than the average for the industry?



Requirement #1
McDonough Products, Inc.
Common-Size Income Statement Compared to Industry Average
Year Ended December 31, 2010
McDonough Products Industry Average
Net sales……………………………………………………
Cost of goods sold………………………………………..
Gross profit…………………………….…………………..
Operating expenses……………………………………….
Operating income………………………………………….
Other expenses…………………………………………….
Net income…………………………………………………

McDonough Products, Inc.
Common-Size Balance Sheet Compared to Industry Average
Year Ended December 31, 2010
McDonough Products Industry Average
Current assets……………………………………………..
Fixed assets, net…………………………………………..
Intangible assets, net………………………………………
Other assets……………………………………………….
Total assets………………………………………………..

Current liabilities………………………….………………..
Long-term liabilities………………………………………..
Stockholders’ equity……………………………………….
Total liabilities and stockholders’ equity…………………

Requirement #2



Requirement #3

teacherjenn4
Dec 1, 2012, 05:31 PM
Are you asking us to do your homework for you?

blackgirlsrock
Dec 2, 2012, 02:23 PM
Any helpful example or similar projects answer would help to complete the homework... completing it would be helpful...

teacherjenn4
Dec 2, 2012, 04:34 PM
any helpful example or similar projects answer would help to complete the homework...... completing it would be helpful...

If this is Accounting 212, I will assume you've taken lower division courses. If you don't have any idea how to approach this, you need to speak with your professor. That's what teachers are there for.

blackgirlsrock
Dec 3, 2012, 01:53 PM
I thought this was a homework help site... if you can't help please don't reply.

Thank you

teacherjenn4
Dec 3, 2012, 05:06 PM
I thought this was a homework help site.....if you can't help please don't reply.

thank you

I can help, but this site works like this: you attempt to do your homework and we help you from there. We won't do your homework for you.

paraclete
Dec 3, 2012, 06:19 PM
I thought this was a homework help site.....if you can't help please don't reply.

thank you

You can get homework help by following the prompts in the lead message at the top of this Board.

This Board is here to discuss accounting principle and problems not provide model answers to assignment questions in any case the information provided in your question appears incomplete