Data from the financial statements of The Gap, Inc., and Nordstrom, Inc., are presented below.

REQUIRED:

a. Compute the return on equity ratio for The Gap and Nordstrom for 2017. Which company earned the higher return for its shareholders?

b. Compute the debt-to-equity ratio for each company as of 2017. Which company relies more on creditor financing?

c. Prepare a 2017 income statement for each company using the format in Exhibit 1.8. For each firm, compute gross profit as a percentage of sales revenue.

d. Based on your answers to questions a, b, and c, compare these two retail companies. What might be the cause of any differences in the ratios that you computed?

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($ millions) The Gap Nordstrom Stockholders' equity, 2017. Stockholders' equity, 2016 $ 977 $ 3,144 2,904 7,989 7,610 15,855 .... ..... 870 ..... .... Total assets, 2017 8,115 ... .. Total assets, 2016 Revenue, 2017. Cost of goods sold, 2017 Net income, 2017... 7,858 15,478 .... .... .... 9,789 9,890 848 437 .....