Chapter 15: Q5SE (page 836)

Data for Connor, Inc. and Alto Corp. follow:
Connor Alto
Net Sales Revenue $ 13,000 $ 22,000
Cost of Goods Sold 7,917 15,730
Other Expenses 4,342 5,170
Net Income $ 741 $ 1,100
Requirements
1. Prepare common-size income statements.
2. Which company earns more net income?
3. Which company’s net income is a higher percentage of its net sales revenue?

Expert verified

Answer

Connor’s net Income Increases

Step by step solution

Requirement:1

Requirement:2

Alto Company earns more net income as compared to Conner of $741.

Requirement:3

The Company Connor i.e., 5.70% has a higher net income Percentage of its net sales revenue as compared to Alto 5.00%

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RANDALL DEPARTMENT STORES, INC. Income Statement Compared with Industry Average Year Ended December 31, 2018
	Randall	Industry Average
Net Sales Revenue	\( 783,000	100.0%
Cost of Goods Sold	527,742	65.8
Gross Profit	255,258	34.2
Operating Expenses	163,647	19.7
Operating Income	91,611	14.5
Other Expenses	6,264	0.4
Net Income	\) 85,347	14.1%

RANDALL DEPARTMENT STORES, INC. Balance Sheet Compared with Industry Average December 31, 2018
	Randall	Industry Average
Current Assets	\( 310,040	70.9%
Property, Plant, and Equipment, Net	119,600	23.6
Intangible Assets, Net	7,360	0.8
Other Assets	23,000	4.7
Total Assets	\) 460,000	100.0%

Current Liabilities	\( 210,680	48.1%
Long-term Liabilities	103,960	16.6
Total Liabilities	314,640	64.7
Stockholders’ Equity	145,360	35.3
Total Liabilities and Stockholders’ Equity	\) 460,000	100.0%