PROBLEM 1–12 Key comparative figures ($ millions) for both NIKE and Reebok follow:

Key Figures NIKE Reebok Key Figures NIKE Reebok Cash and equivalents . . . . . . . $ 108.6 $ 209.8 Income taxes . . . . . . . . . . . $ 253.4 $ 12.5 Accounts receivable . . . . . . . . 1,674.4 561.7 Revenues (Nike) . . . . . . . . . 9,553.1 —

Inventories . . . . . . . . . . . . . . . 1,396.6 563.7 Net sales (Reebok) . . . . . . . — 3,643.6 Retained earnings . . . . . . . . . 3,043.4 1,145.3 Total assets . . . . . . . . . . . . 5,397.4 1,756.1 Costs of sales . . . . . . . . . . . . . 6,065.5 2,294.0 Required:

a. Compute common-size percents for both companies using the data provided.

b. Which company incurs a higher percent of their revenues (net sales) in income taxes?

c. Which company retains a higher portion of cumulative net income in the company?

d. Which company has a higher gross margin ratio on sales?

e. Which company holds a higher percent of its total assets as inventory?