The managerial accountant at Company A, a small retailer, reviews information about Company B, a large national firm. Review the following information listed below about Company A and Company B: Grading: 2 points per question, half credit on 1 and 3 if no discussion is given, any reasonable discussion is OK.

Company A Income statement: Verticle Analysis	Company A	Company B
Sales Revenue	100%	100%
Less: Cost of goods sold	62.40%	71.20%
Gross Profit	37.60%	28.80%
Less: Operating Expenses	18.20%	16.10%
Operating income	19.40%	12.70%
Less: Interes Expense	1.98%	1.60%
Income before income taxes	17.42%	11.10%
Less: Income Tax Expense	3.40%	2.98%
Net income	14.02%	8.12%

1. Why does the managerial accountant at Company A review the income statement at Company B?

2. What is the name of this statement?

3. Which company is most profitable? Why?