Use the following financial statements of Precision Co. to complete these requirements. Transcribed Image Text: 1. Prepare comparative income statements showing the percent increase or

Use the following financial statements of Precision Co. to complete these requirements. Transcribed Image Text: 1. Prepare comparative income statements showing the percent increase or decrease for the current year
in comparison to the prior year.
2. Prepare common-size comparative balance sheets for both years.
3. Compute the following ratios for the current year and identify each one’s building block category for
financial statement analysis.
a. Current ratio
g. Debt-to-equity ratio
h. Times interest earned
i. Profit margin ratio
j. Total asset turnover
k. Return on total assets
I. Return on common stockholders’ equity
b. Acid-test ratio
Accpunts receivable turnover
d. Days’ sales uncollected
e. Inventory turnover
c.
f. Debt ratio Transcribed Image Text: PRECISION COMPANY
Comparative Income Statements
For Years Ended December 31
Current Yr
Prlor Yr
Sales …..
$2,486,000
$2,075,000
Cost of goods sold …
Gross profit….
1,523,000
1,222,000
963,000
853,000
Operating expenses
Advertising expense..
Sales salarles expense..
145,000
100,000
240,000
280,000
Office salarles expense.
165,000
200,000
Insurance expense.
100,000
45,000
Supplles expense..
26,000
35,000
Depreciation expense
85,000
75,000
Miscellaneous expenses
17,000
15,000
Total operating expenses
778,000
750,000
Operating Income..
185,000
103,000
Interest expense..
Income before taxes…
Income tax expense .
Net Income …..
44,000
46,000
141,000
57,000
47,000
19,000
$ 38,000
$ 94,000
Earnings per share….
2$
$
0.99
0.40

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