Comparative financial statement data for Donovan Company and Maltese Company,two competitors in the same industry,appear below.All balance sheet data are as of December 31,2012,and December 31,2011.

REQUIRED:
(a)Prepare a common-size 2012 income statement using the data for Donovan Company and Maltese Company in columnar form.
(b)Comment on the relative profitability of the companies by computing the return on assets (Net income/(Average total assets)and the return on total equity (Net income / (Average Shareholders' Equity)ratios for both companies.

Question

Comparative financial statement data for Donovan Company and Maltese Company,two competitors in the same industry,appear below.All balance sheet data are as of December 31,2012,and December 31,2011.
  
REQUIRED:
(a)Prepare a common-size 2012 income statement using the data for Donovan Company and Maltese Company in columnar form.
(b)Comment on the relative profitability of the companies by computing the return on assets (Net income/(Average total assets)and the return on total equity (Net income / (Average Shareholders' Equity)ratios for both companies.

Quizplus · Accepted Answer

The Answer of Comparative financial statement data for Donovan Company and Maltese Company,two competitors in the same industry,appear below.All balance sheet data are as of December 31,2012,and December 31,2011.
  
REQUIRED:
(a)Prepare a common-size 2012 income statement using the data for Donovan Company and Maltese Company in columnar form.
(b)Comment on the relative profitability of the companies by computing the return on assets (Net income/(Average total assets)and the return on total equity (Net income / (Average Shareholders' Equity)ratios for both companies.

Comparative Financial Statement Data for Donovan Company and Maltese Company,two