Following are selected income statement and balance sheet data from two European grocery chain companies: Tesco PLC (UK) and Ahold (The Netherlands).

Required

a. Prepare a common-sized income statement. To do this, express each income statement amount as a percent of sales. Comment on any differences observed between the two companies. Ahold's gross profit percentage of sales is considerably higher than Tesco's. What might explain this difference?

b. Prepare a common-sized balance sheet. To do this, express each balance sheet amount as a percent of total assets. Comment on any differences observed between the two companies.

c. Ahold has chosen to structure itself with a higher proportion of equity (and a lower proportion of debt) than Tesco. How does this capital structure decision affect your assessment of the relative riskiness of these two companies?

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Income Statements (for fiscal year ended) Sales...... Cost of goods sold.. Gross profit..... Total expenses. Net income.. Balance Sheet (as of) Current assets... Long-term assets. Total assets.... Current liabilities... Long-term liabilities Total liabilities.. Stockholders' equity. Total liabilities and equity. February 23, 2013 (in millions) 64,826 (60,737) 4,089 (3,969) 120 Tesco February 23, 2013 (in Emillions) 13,096 37,033 50,129 18,985 14,483 33,468 16,661 50,129 December 30, 2012 (in millions) 32,841 (24,317) 8,524 (7,697) 827 Ahold December 30, 2012 (in millions) 4,416 10,666 15,082 4,427 4,660 9,087 5,995 15,082