In comparing the percentage changes, all margins improved for

Prairie Inc. only

both Crosby Co. and Prairie Inc.

Crosby Co. only

. The increasing margins were attributable to

the same amount of

higher

lower

cost of goods sold and

increases in

decreases in

the same amount of

operating expenses per dollar of sales. (Select from the drop-down menus.)

b. Compare the profit margins between Crosby Co. and Prairie Inc. Which of the following statements is not true?(Select the best choice below.)

A.

A comparison of profit margins between the two companies is not very insightful without looking at the percentage changes in margins.

B.

The operating profit margins are much closer, but are higher for Prairie Inc.

C.

Crosby Co.'s gross profit margins are about 1.5 times those of Prairie Inc., which indicates that Crosby Co.'s cost of goods sold per dollar of sales are much smaller than the case for Prairie Inc.

D.

Prairie Inc. has an advantage since its net profit margin is higher.

c. What differences do you notice in the common-sized balance sheets that might indicate that one of the firms is doing better than the other?(Select all that apply.)

A.

Prairie Inc. has a larger size when it comes to total assets. Furthermore, the relative make-up of the assets is fairly similar.

B.

Based on retained earnings, we see that Crosby Co. has about $86 billion in accumulated profits over the life of the business, while Prairie Inc. has accumulated profits of close to $47 billion.

C.

Crosby Co. has sold over $150 billion in common stock, compared to less than $34 billion by Prairie Inc.

D.

Time Warner relies more heavily on debt financing with a debt ratio of about 56 percent compared to approximately 44 percent for Walt Disney.

E.

Since Crosby Co. produces about $0.39 of sales per dollar of assets compared to Prairie Inc. generating about $0.55 of sales per dollar of assets, Prairie Inc. is clearly using its assets more efficiently than Crosby Co.

O O O PINL 235 DLA SUmmer 2019 Henry Barrera & 6/9/19 8:35 PM Test: Mini Case 3 gg els Submit Test This Question: 1 pt x7 F This Test: 1 pts possible 1 of 1 n: Th Ouestion Jleln Data Table The tatemer . Prairie b. 2017 2018 C. V sby Co Dollars Percentage of Sales Dollars Percentage of Sales swer t Sales $ 28,729 100.0 % $ 29,795 100.0 % profit se diff Ho 15,934 55.5 % 16,230 54.5% Cost of goods sold Gross profits $12,795 44.5% $ 13,565 45.5% ces d etter t Selling, general, and administrative expenses 6,333 22.0 % 6,465 21.7% How Depreciation and amortization 248 0.9% 251 0.8% nual Ir 296 1.0% 244 0.8 % Other operating expenses 17 and S 5,918 20.6 % $ 6,605 22.2% In d Operating income 1,253 4.4% 1.190 4.0 % Interest expense (217) -0.8 % (112) -0.4 % Nonoperating income (expenses) b. Q $ 4,448 15.5 % S 5,303 17.8% Eamings before tax 1,526 5.3% 1,612 5.4 % Income taxes $ 2,922 10,2% 3,691 12.4% Net income (loss) 932.0 942.0 Common shares outstanding Print Done Clicl Aj 25,636 JUN O O O PINL 235 DLA SUmmer 2019 Henry Barrera & 6/9/19 8:35 PM Test: Mini Case 3 gg els Submit Test This Question: 1 pt x7 F This Test: 1 pts possible 1 of 1 n: Th Ouestion Jleln Data Table The tatemer . Prairie b. 2017 2018 C. V sby Co Dollars Percentage of Sales Dollars Percentage of Sales swer t Sales $ 28,729 100.0 % $ 29,795 100.0 % profit se diff Ho 15,934 55.5 % 16,230 54.5% Cost of goods sold Gross profits $12,795 44.5% $ 13,565 45.5% ces d etter t Selling, general, and administrative expenses 6,333 22.0 % 6,465 21.7% How Depreciation and amortization 248 0.9% 251 0.8% nual Ir 296 1.0% 244 0.8 % Other operating expenses 17 and S 5,918 20.6 % $ 6,605 22.2% In d Operating income 1,253 4.4% 1.190 4.0 % Interest expense (217) -0.8 % (112) -0.4 % Nonoperating income (expenses) b. Q $ 4,448 15.5 % S 5,303 17.8% Eamings before tax 1,526 5.3% 1,612 5.4 % Income taxes $ 2,922 10,2% 3,691 12.4% Net income (loss) 932.0 942.0 Common shares outstanding Print Done Clicl Aj 25,636 JUN