Using common size statements and ratios to make comparisons
At the end of 2012, the following information is available for Chicago and St. Louis companies:
| Chicago | St. Louis |
Sales | $3,000,000 | $3,000 |
Cost of goods sold | 1,800,000 | 2,100 |
Selling and administrative expenses | 960,000 | 780 |
Total assets | 3,750,000 | 3,750 |
Stockholders’ equity | 1,000,000 | 1,200 |
Required
a.Prepare common size income statements for each company.
b. One company is a high-end retailer, and the other operates a discount store. Which is the discounter? Support your selection by referring to the common size statements.
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