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if design and royal have equity of 40 000 and 21 000 respectively which company is t 650213

Business Applications Case Using ratios to make comparisons

The following income statements were drawn from the annual reports of Design Company and Royal Company.

Design

Royal

Net Sales

$95,700

$52,300

Cost of Goods Sold

68,900

31,400

Gross Margin

26,800

20,900

Less: Selling and Admin. Expenses

22,000

18,800

Net Income

$4,800

$2,100

Required

a. One of the companies is a high end retailer that operates in exclusive shopping malls. The other operates discount stores located in low cost stand alone buildings. Identify the high end retailer and the discounter. Support your answer with appropriate ratios.

b. If Design and Royal have equity of $40,000 and $21,000, respectively, which company is the more profitable?

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