Comparing Income Statements and Balance Sheets of Competitors Following are selected income statement and balance sheet data from two retailers Abercrombie & Fitch (clothing retailer in the high end market) and TJX Companies (clothing retailer in the value priced market). (a) Express each income statement amount as a percentage of sales. Round your answers to one decimal place (ex: 0.2345 = 23.54) Incarna Scalement (3 millions) ANF TJX $3 750 OFF 1647 Cost of goods sold 1,239 39 4 14,08 75.5 Gross profit 2,511 67 % 4,565 245 M Total expanses 2,035 543 % 3,793 203 % Net income $476 12.7 4 $ 772 4.1 H (b) Express each balance sheet amount as a percentage of total assets. Round your answers to one decimal place (ex: 0.2345 = 23.54) Balance Sheet ($ millions) ANF TJX Currant affini $1,140 44.4 4 $3912 60.5 % Long-term assets 1,427 55.6 4 2,608 34.59 Total aboats 42,567 $6.600 Currant liab Thias $543 21 2% $2,761 41.8 Long-term liabilities 406 158 4 1,708 25.94 Total liabilities 37 4 4460 67.7% Stockholders equity 1,618 63 4 2131 32.39 Tocal liabilities and equity $2,567 $6,600 Which of the following statements about business models is most consistent with the computations for part (a)? CANPs expenses as a percentage of sales are higher because it spends more on advertising than does TIX. OANF is a high-end retailer that is able to charge high prices for its products, but bears substantial operating costs to support its "shopping experience." CANE's profit is higher than TO's as a percentage of sales because its sales are higher than TJX's. CANP's gross profit is higher than TJX's because its sales volume allows it to manufacture clothes at a lower per unit cost than can TO. Which of the following statements about business models is most consistent with the computations for part (b)? CANF reports lower current assets as a percentage of total assets because it pays its vendors on a more timely basis than does TIX. CANF reports higher long-term assets as a percentage of total assets because it depreciates its long-term assets more slowly than does TJX. OANF reports lower current assets and higher long-term assets as a percentage of total assets because it carries less inventory and has a greater capital investment in its stores than does TJX. CANF reports lower current assets as a percentage of total assets because it is a smaller company and cannot afford the investment in inventory. (c) Which company has a lower proportion of debt? What do the ratios tell us about relative riskiness of the two companies? CANF has a lower proportion of debt than does TJX, which implies that ANF is less risky than TIX. Off has a lower proportion of debt than does ANF, which implies that TJX is less risky than ANF. OANF has a higher proportion of debt than does TJX, which implies that ANF is less risky than TJX. Tip: has a higher proportion of debt than does ANF, which implies that TOX is less risky than ANF