Module 2 1 Review of Business Activities and Financial Statements S APPLICATIONS LO1,2 12.55. Comparing Income Statements and Balance Sheets of Competitors ADJUSTMENTS 2.1 and 23 Following are selected income statement and balance sheet data from two European grocery chain com panies: Tesco PLC (UK) and Ahold (the Netherlands). Ahold December 30, 2015 le millions) Income Statements For Fiscal Year Ended Tesco February 27, 2016 ( millions) 154,433 51,579 2,854 2.716 138 39.203 27.835 Sales.. Cost of goods sold... Gross profit.............. Total expenses......... Net income.... 10.368 9.517 851 Tesco February 27, 2016 1 millions) Balance Sheet Current assets ........ Long-term assets.......... Total assets. .......... Ahold December 30, 2015 (e millions) 5.260 10.620 15.880 $14,828 29,076 43,904 Current liabilities......... .... Long-term liabilities .......... Total liabilities..... Stockholders' equity .......... Total liabilities and equity ......... 19,714 15,574 35.288 8,616 5,002 5,257 10.259 5.621 ... 943,904 15,880 Required a. Prepare a common-size income statement. To do this, express each income statement amount as percent of sales. Comment on any differences observed between the two companies. Ahold's gros profit percentage of sales is considerably higher than Tesco's. What might explain this difference b. Prepare a common-size balance sheet. To do this, express each balance sheet amount as a percent total assets. Comment on any differences observed between the two companies. c. Ahold has chosen to structure itself with a higher proportion of equity (and a lower proportion of than Tesco. How does this capital structure decision affect our assessment of the relative riskin these two companies? LYSIS DISCUSSION POINTS