The following income statements were drawn from the annual reports of the Banks Company and the Stone Company.

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 Banks and Stone have equity of \(\$ 102,000\) and \(\$ 65,900\), respectively, which company is in the more profitable business?

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Net sales Cost of goods sold Gross margin Less: Operating exp. Selling and admin. exp. Net income Banks* Stone* $ 90,000 $ 80,000 (54,000) (60,000) 36,000 20,000 (28,800) (14,400) $ 7,200 $ 5,600 *All figures are reported in thousands of dollars.