2) The managerial accountant at Company A, a small retailer, reviews information about Company B, a large national firm. Review the following information listed below about Company A and Company B:

Why does the managerial accountant at Company A review the income statement at Company B? What is the name of this statement? Which company is most profitable? Why?

Sales revenues Less: Cost of goods sold Gross profit Less: Operating expenses Operating income Less: Interest expense Income before income taxes Less: Income tax expense Net income Company A Income Statement Vertical Analysis Company A Company B 100% 100% 62.40% 71.20% 28.80% 37.60% 18.20% 1610% 19.40% 12.70% 1.98% 1.60% 17.42% 11.10% 2.98% 3.40% 14.02% 8.12%