Comparative income statement data for Chen Inc. and Chuan Ltd., two competitors, are shown below for the year ended December 31, 2017.

Instructions
(a) Using vertical analysis, calculate the percentage of the base amount 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 2017 for each company.
(c) Using the information calculated in parts (a) and (b), compare the profitability of each company.
(d) Is your comparison in part (c) an intracompany comparison or an intercompany comparison? Explain.
TAKING IT FURTHER
How is your assessment of profit ability affected by the differing sizes of the two companies, if at all? Explain.

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$1,849,035 Cost of goods sold 5 Operating expenses Profit from operations 5 2 Profit before income tax Income tax expense 9 Additional information: Average total assets Average total shareholders equity 186,238