Todd Department Stores' chief executive officer (CEO) has asked you to compare the company's profit performance and financial position with the average for the industry. The CEO has given you the company's income statement and balance sheet, as well as the industry average data for retailers.

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.Requirement 1. Prepare a common-size income statement and balance sheet for

Todd Department Stores. The first column of each statement should present Todd Department Stores' common-size statement, while the second column should present the industry averages. (Round your answers to two decimal places, X.XX.)

Start with preparing a common-size income statement.

Todd Department Stores, Inc.
Common-Size Income Statement Compared to Industry Average
For the Year Ended December 31
	Todd		Industry
	(%)		Average
Sales revenues		%	100.0	%
Less: Cost of goods sold		%	65.9	%
Gross profit		%	34.1	%
Less: Operating expenses		%	19.8	%
Operating income		%	14.3	%
Less: Interest expense		%	0.4	%
Income before income taxes		%	13.9	%
Less: Income tax expense		%	0.4	%
Net income		%	13.5	%

DATA TABLE

Todd Department Stores, Inc.

Income Statement Compared with Industry Average

For the Year Ended December 31

(amounts in thousands)

Todd

Industry Average

Sales revenues

$782,000

100.0

%

Less: Cost of goods sold

526,286

65.9

%

Gross profit

$255,714

34.1

%

Less: Operating expenses

164,220

19.8

%

Operating income

$91,494

14.3

%

Less: Interest expense

1,173

0.4

%

Income before income taxes

$90,321

13.9

%

Less: Income tax expense

5,083

0.4

%

Net income

$85,238

13.5

%

DATA TABLE

Todd Department Stores, Inc.
Balance Sheet Compared with Industry Average
As of December 31
(amounts in thousands)
	Todd	Industry Average
Assets
Current assets	$312,340	71.0	%
Fixed assets, net	117,760	23.7	%
Intangible assets, net	5,980	0.8	%
Other assets	23,920	4.5	%
Total assets	$460,000	100.0	%
Liabilities
Current liabilities	$213,440	48.0	%
Long-term liabilities	104,880	16.5	%
Total liabilities	$318,320	64.5	%
Stockholders' equity
Total common stockholders' equity	$141,680	35.5	%
Total liabilities and equity	$460,000	100.0	%

REQUIREMENT

1.

Prepare a common-size income statement and balance sheet forTodd

Department Stores. The first column of each statement should present Todd

Department Stores' common-size statement, while the second column should present the industry averages.

2.

For the profitability analysis, compute Todd

Department Stores' (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 Todd

Department Stores' profit performance better or worse than the industryaverage?

3.

For the analysis of financial position, computeTodd

Department Stores' (a) ratio of current assets to total assets and (b) ratio of stockholders' equity to total assets. Compare these ratios with the industry averages. Is Todd

Department Stores' financial position better or worse than the industry averages?