Comparative Financial Statement Data for Donovan Company and Maltese Company,two

question 40

Essay

Comparative financial statement data for Donovan Company and Maltese Company,two competitors in the same industry,appear below.All balance sheet data are as of December 31,2012,and December 31,2011.
REQUIRED:
(a)Prepare a common-size 2012 income statement using the data for Donovan Company and Maltese Company in columnar form.
(b)Comment on the relative profitability of the companies by computing the return on assets (Net income/(Average total assets)and the return on total equity (Net income / (Average Shareholders' Equity)ratios for both companies.

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Definitions:

Water-Vascular System

Of echinoderms, a system of fluid-filled tubes and tube feet that function in locomotion.

Echinoderms

A phylum of marine animals characterized by radial symmetry, a calcareous skeleton, and a water vascular system, includes starfish and sea urchins.

Radial Symmetry

A form of symmetry found in some organisms, where body parts or structures radiate from a central point, allowing for multiple planes of symmetry.

Mantle

The layer of the earth between the crust and the outer core, involved in tectonic movements and volcanic activity.