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P14-1 Lionel Company

Price: $2.50


P14-1 Comparative statement data for Lionel Company and Barrymore Company, two
competitors, appear below. All balance sheet data are as of December 31, 2014, and
December 31, 2013.

Lionel Company Barrymore Company
2014 2013 2014 2013
Net sales   1,549,035  339,038
Cost of goods sold   1,053,345  237,325
Operating expenses   278,825  77,979
Interest expense   7,745  2,034
Income tax expense   61,960  8,476
Current assets   401,584  388,020  86,450  82,581
Plant assets (net)   596,920  575,610  142,842  128,927
Current liabilities   65,015  75,507  19,618  14,654
Long-term liabilities   102,500  84,000  16,711  11,989
Common stock, $5 par   578,765  578,765  137,435  137,435
Retained earnings   252,224  225,358  55,528  47,430


Instructions
(a) Prepare a vertical analysis of the 2014 income statement data for Lionel Company and
Barrymore Company in columnar form.
(b) Comment on the relative profi tability of the companies by computing the return
on assets and the return on common stockholders’ equity ratios for both companies.

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