Using ratios to make comparisons
The following income statements were drawn from the annual reports of the Catrow Company and the Furman Company.
| Catrow* | Furman* |
Net sales | $ 32,600 | $ 86,200 |
Cost of goods sold | (24,450) | (47,410) |
Gross margin | 8,150 | 38,790 |
Less: Operating exp. | ||
Selling and admin, exp. | (6,520) | (30,170) |
Net income | $ 1,630 | $ 8,620 |
* All figures are reported in thousands of dollars.
Required
a. One of the companies is a high-end retailer that operates in exclusive shopping malls. The other operates discount stores that are located in low-cost, stand-alone buildings. Identify the high-end retailer and the discounter. Support your answer with appropriate ratios.
b. If Catrow and Furman have equity of $14,100 and $95,800, respectively, which company is in the more profitable business?
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