Question 6 Tries remaining: 1 Marked out of 0.17 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: .2345 = 23.5%). Income Statement ($ millions) ANF TJX Sales $2,021 $14,913 Cost of goods sold 680 0% 11,399 0% Gross profit 1,341 0% 3,514 0% Total expenses 1,125 0% 2,904 0% Net income $216 0% $610 0% (b) Express each balance sheet amount as a percentage of total assets. Round your answers to one decimal place (ex: 0.2345 = 23.5%). Balance Sheet ANF ($ millions) TJX Current assets $ 672 0% $2,905 0% Long-term assets 715 0% 2,170 0% Total assets $1,387 $5,075 Current liabilities $429 0% $2,204 0% Long-term liabilities 288 0% 1,124 0% Total liabilities 717 0% 3,328 0% Stockholders' equity 670 0% 1,747 $5,075 0% Total liabilities and equity $1,387 some percentages may not total due to rounding Which of the following statements about business models is most consistent with the computations for part (a)? OANF's expenses as a percentage of sales are higher because it spends more on advertising than does TJX. 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." OANF'S profit is higher than TJX's as a percentage of sales because its sales are higher than TJX's. OANF'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 TJX. Which of the following statements about business models is most consistent with the computations for part (b)? OANF reports lower current assets as a percentage of total assets because it pays its vendors on a more timely basis than does TJX. OANF 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. OANF 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? OANF has a lower proportion of debt than does TJX, which implies that ANF is less risky than TJX. OTJX 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. OTIX has a higher proportion of debt than does ANF, which implies that TJX is less risky than ANF.