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Requirement 1. Prepare a common-size income statement for RussellRussellDepartment Stores. (Round your answers to one decimal place.)

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Requirement 1. Prepare a common-size income statement for RussellRussellDepartment Stores. (Round your answers

to one decimal place.)

Russell Department Stores, Inc.
Common-Size Income Statement Compared to Industry Average
Year Ended December 31, 2010
  RussellIndustry
  (%)Average (%)
 Net sales 100.0
 Cost of goods sold 65.8
 Gross profit 34.2
 Operating expenses 19.7
 Operating income 14.5
 Other expenses 0.4
 Net income 14.1

Prepare a common-size balance sheet for RussellRussell. (Round your answers to one decimal place.)

Russell Department Stores, Inc.
Common-Size Balance Sheet Compared with Industry Average
December 31, 2010
  RussellIndustry
  (%)Average (%)
 Current assets 70.9
 Fixed assets, net 23.6
 Intangible assets, net 0.8
 Other assets 4.7
 Total assets 100.0
 Current liabilities 48.1
 Long-term liabilities 16.6
 Stockholders’ equity 35.3
 Total liabilities and stockholders’ equity 100.0

Requirement 2. For the profitability analysis, compute RussellRussell’s(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.RussellRussell’scommon-size income statement shows that its ratios of gross profit, operating income and net income to net sales are ▼betterworsethan the industry averages. Overall,RussellRussell’sprofit performance is ▼betterworsethan average for the industry.Requirement 3. For the analysis of financial position, compute RussellRussell’s(a) ratio of current assets to total assets and (b) ratio of stockholders’ equity to total assets. Compare these ratios with the industry averages.RussellRussell’scommon-size balance sheet shows that its ratio of current assets to total assets and its ratio of stockholders’ equity to total assets are ▼betterworsethan the industry averages. Overall,RussellRussell’sfinancial position is ▼betterworsethan average for the industry.

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