a.) Set up the spreadsheet shown here. Complete the income statements by using Excel formulas.

b.) Prepare a common size income statement for each company by completing the % Sales columns.

c.) 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 common size statements.

d.) Compute the return on assets and return on equity for each company.

e.) Which company is more profitable from the stockholders perspective?

f.) Assume that a shortage of goods from suppliers is causing cost of goods sold to increase 10 percent for each company. Change the respective cost of goods sold balances in the Actual income statement column for each company. Note the new calculated amounts on the income statement and in the ratios. Which companys profits and returns are more sensitive to inventory price hikes?

Microsoft Excel ch5-2.xds Ele Edit Yew Insert Fgnnd lools Qata wrdow belp 10 BIU C3 Wise 2 3 Sales 4 Cost of Goods Sold 1,050,000 5 Gross Margin 6 Operating Expenses375000 7 Net Income Actual INSales1 Actual Sales 1,500.000 10000-1 | 1 .500,00 450 ,000 Actual Return Actual Retum 1800,000 10 10 Total Assets 11 Stockholders' Equity540,000 12 1,800,000 540,000