Compare

Rodriguez

and

Verde

by converting their income statements to common size.

	Rodriguez	Verde
Net sales. . . . . . . . . . . . . . . . . . . . . . . . . . .	$10,400	$16,540
Cost of goods sold. . . . . . . . . . . . . . . . . .	6,354	11,843
Other expense. . . . . . . . . . . . . . . . . . .	3,401	3,903
Net income. . . . . . . . . . . . . . . . . . . . . . . . .	$645	$794

Which company earns more net income? Which company's net income is a higher percentage of its net sales?

Prepare the common-sized financial analysis: (Round percentages to the nearest tenth percent.)

	Rodriguez			Verde
	Amount	%		Amount	%
Net sales. . . . . . . . . . . . . . . . . . .	$10,400		%	$16,540		%
Cost of goods sold. . . . . . . . . .	6,354		%	11,843		%
Other expenses. . . . . . . . . . . . .	3,401		%	3,903		%
Net income. . . . . . . . . . . . . . . . .	$645		%	$794		%

Which company earns more net income? Which company's net income is a higher percentage of its net sales?

Verde

Rodriguez

earns more net income.

Rodriguez

Verde

has a net income at a higher percentage of net sales.