At the end of 2016 the following information is available for Billings and Phoenix companies:

Required
a. Prepare a common size income statement for each company.
b. Compute the return on assets and return on equity for each company.
c. Which company is more profitable from the stockholders€™ perspective?
d. 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 appropriate ratios.

Transcribed Image Text:

Billings Phoenx Sales Cost of goods sold Operating expenses Total assets Stockholders' equity $3,000,000 1,800,000 960,000 3,750,000 1,000,000 $3,000 2,100 780 3,750 1,200