Part (a) (5 marks)

Guinea Pig and Rabbit Pet Supplies Pty Ltd sell pet supplies targeted at the personal household market including a range of specialty food. As the owner you are trying to determine whether to buy your supplies from Pets Are Us Ltd or Small Animals Ltd.

Required:

Complete a vertical analysis for the business below.

All answers must be rounded to no decimal places.

	Pets Are Us Ltd	%	Small Animals Ltd	%
Sales	376,000		175,000
Cost of Sales	169,200		105,000
Gross Profit	206,800		70,000
Total Operating Expenses	125,000		45,000
EBIT	81,800		25,000
Interest Expense	23,000		2,000
Profit before income tax	58,800		23,000
Income tax expense	17,000		7,000
Profit	41,800		16,000

Based on your findings make a recommendation and justification, include 2 points from the data, as to which business you think you should choose to supply you with guinea pig and rabbit food.