Comparative income statement data for Chen Inc. and Chuan Ltd., two competitors, are shown below for the year ended December 31, 2014.

Instructions
(a) Using vertical analysis, calculate the percentage of the base amount for each year of the income statement for each company.
(b) Calculate the gross profit margin, profit margin, asset turnover, return on assets, and return on equity ratios for 2014 for each company.
(c) Using the information calculated in (a) and (b), compare the profitability of each company.
(d) Is your comparison in (c) an intra company comparison or an intercompany comparison? Explain.
Taking It Further
How is your assessment of profitability affected by the differing sizes of the two companies, if at all? Explain.

Chuan $539,038 338,006 201,032 89,000 112,032 Chen Net sales Cost of goods sold Gross profit Operating expenses Profit from operations Interest expense Profit before income tax Income tax expense Profit $1,849,035 1,060,490 788,545 502,275 286,270 6,800 279,470 83,841 $ 195,629 1,252 110,780 27,695 s 83,085 Additional information: Average total assets Average total shareholders' equity $ 894,750 724,430 $251,313 186,238