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question roost department stores inc balance sheet compared with industry average de 4291263

Question

Roost Department Stores, Inc

Balance Sheet Compared with Industry Average

December 31, 2016

 

Roost

Industry Average

Current Assets

$316,780

70.9%

FIxed Assets, Net

120,320

23.6

Intangible Assets, Net

7,990

0.8

Other Assets

24,910

4.7

Total Assets

$470,000

100.0%

Current Liabilities

$217,140

48.1%

Long term Liabilities

104,340

16.6

Total Liabilities

321,480

64.7

Stockholders' Equity

148,520

35.3

Total Liabilities and Stockholders's Equity

470,000

100.0%

Roost Department Stores, Inc.

Income Statment Compared with Industry Average

Year Ended December 31,2016

 

Roost

Industry Average

Net Sales

$779,000

100.0%

Costs of Goods Sold

526,604

65.8

Gross Profit

252,396

34.2

Operating Expenses

163,590

19.7

Operating Income

88,806

14.5

Other Expenses

5,453

.04

Net Income

$83,353

14.1%

 

 

 

 

 

 

 

 

The RoostDepartment? Stores, Inc. chief executive officer? (CEO)has asked you to compare the? company's profit performance andfinancial position with the averages for the industry. The CEO hasgiven you the? company's income statement and balance sheet as wellas the industry average data for retailers.

Requirement 1. Prepare a? common-size income statement andbalance sheet for Roost. The first column of each statement shouldpresent Roost?'s ?common-size statement, and the second? column,the industry averages.

Begin by preparing the? common-size income statement for Roost.?(Round your answers to one decimal? place, X.X%.)

Roost Department Stores, Inc.

Common-Size Income Statement

Year Ended December 31, 2016

 

Roost

Industry Average

Net Sales

 

%

100.0

%

Cost of Goods Sold

 

%

65.8

%

Gross Profit

 

%

34.2

%

Operating Expenses

 

%

19.7

%

Operating Income

 

%

14.5

%

Other Expenses

 

%

0.4

%

Net Income

 

%

14.1

%

         

Prepare a? common-size balance sheet for Roost ?(Round youranswers to one decimal? place, X.X%.)

Roost Department Stores, Inc.

Common-Size Balance Sheet

December 31, 2016

 

Roost

Industry Average

Current Assets

 

%

70.9 %

Fixed Assets, Net

 

%

23.6 %

Intangible Assets, Net

 

%

0.8 %

Other Assets

 

%

4.7 %

Total Assets

 

%

100.0%

 

 

 

 

Current Liabilities

 

%

48.1 %

Long-term Liabilities

 

%

16.6 %

Total Liabilities

 

%

64.7 %

Stockholders' Equity

 

%

35.3 %

Total Liabilities and Stockholders' Equity

 

%

100.0%

       

Requirement 2. For the profitability? analysis, compute Roost?'s?(a) gross profit percentage and? (b) profit margin ratio. Comparethese figures with the industry averages. Is Roost?'s profitperformance better or worse than the industry? average?

?(a) Compute Roost?'s gross profit percentage. ?(Round the grossprofit percentage to one decimal? place, X.X%.)

Gross profit percentage? = (select correctanswer: Gross profit / Net salesor  Gross profit / Total assetsor Net income /Gross profit orNet income / Net sales) ?=________?%

?(b) Compute Roost?'s profit margin ratio. ?(Round the profitmargin ratio to one decimal? place, X.X%.)

Profit margin ratio? = (select correct answer:Net income / Net sales or Net income /Stockholders' equity or Net income / Total assetsor Net sales / Total assets)?=_________?%

Compare these figures with the industry averages. Is Roost?'sprofit performance better or worse than the industry? average?Roost?'s gross profit percentage is (select correctanswer: better or worse ) than theindustry averages and profit margin ratio is (selectcorrect answer: better or worse ) thanthe industry average.

Requirement 3. For the analysis of financial? position, computeRoost?'s ?(a) current ratio and? (b) debt to equity ratio. Comparethese ratios with the industry averages. Assume the current ratioindustry average is? 1.47, and the debt to equity industry averageis 1.83. Is Roost?'s financial position better or worse than theindustry? averages?

?(a) Compute Roost?'s current ratio. ?(Round the ratio to twodecimal? places, X.XX.)

Current ratio? = (select correct answer: Netincome / Total current assets or Total assets /Total liabilities or Total current assets / Netincome or Total current assets / Total currentliabilities or Total current assets / Totalliabilities or Total current liabilities / Totalcurrent assets)   ?= _________

?(b) Compute Roost?'s debt to equity ratio. ?(Round the ratio totwo decimal? places, X.XX.)

Debt to equity ratio? = (select correct answer:Total current liabilities / Total current assetsor Total current liabilities / Total equityor Total equity / Total liabilitiesor Total liabilities / Total assetsor Total liabilities / Total equity) ?=_______

Compare these ratios with the industry averages. Assume thecurrent ratio industry average is 1.47 and the debt to equityindustry average is 1.83. Is Roost?'s financial position better orworse than the industry? averages?

Roost?'s current ratio is (select correctanswer: close to or significantly betterthan or signiicantly worse than) the industryaverage.

The debt to equity ratio is (select correctanswer:close to or significantly betterthan or significantly worse than) than theindustry average.

 

 

 

 

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