The following information is available for Billings and Phoenix companies:

Required

a. Prepare a common size income statement for each company.

b. Compute the return on assets and return on equity for each company.

c. Which company is more profitable from the stockholders’ perspective?

d. One company is a high-end retailer, and the other operates a discount store. Which is the discounter?

Support your selection by referring to the appropriate ratios.

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Billings Phoenix Sales $3,000,000 $3,000 Cost of goods sold Operating expenses Total assets 1,800,000 2,100 960,000 780 3,750,000 3,750 Stockholders' equity 1,000,000 1,200