ACCT 212 : Course Project 2Learning Objectives : Preparing common-size statements; analyzingprofitability; making comparisons with the industryP13-50A Top managers of O’Hare Products, Inc., have asked for your help incomparing the companyâs profit performance and financial position with the average for the industry. The accountant has given you the companyâs income statement and balance sheet and also the following data for the industry. The problem is that O’Hare is in dollars and the Industry Average is in percentages. To complete the analysis you will need to convert O’Hare’s dollar amounts to percentages.O’Hare Products, Inc.Income Statement Compared with Industry AverageYear Ended December 31, 2012O’HareIndustryAverage$ 960,000100.0%662,40057.3%297,60042.7%220,80029.4%76,80013.3%9,6002.5%$ 67,20010.8%O’Hare Products, Inc.Balance Sheet Compared with Industry AverageDecember 31, 2012O’HareIndustryAverage$ 292,00072.1%72,80019.0%14,0004.8%21,2004.1%400,000100.0%188,00047.2%84,00021.0%128,00031.8%$ 400,000100.0%RequirementsPrepare a common-size income statement and balance sheet for OâHare Products. The first column of each statement should present OâHare Productsâ common-size statement, and the second column should show the industry averages.For the profitability analysis, compare OâHare Productsâ (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 with the industry averages. Is OâHare Productsâ profit performance better or worse than the average for the industry?For the analysis of financial position, compute OâHare Productsâ (a) ratios of current assets and current liabilities to total assets and (b) ratio of stockholdersâ equity to total assets. Compare these ratios with the industry averages. Is OâHare Productsâ financial position better or worse than the average for the industry?
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