Question 2 520 marks} Comparative nancial statement data for Donovan Company and Maltese Company, two competitors in the same industry, appear below. All balance sheet data are as of December 31, 2012, and December 31, 201 1. Donovan Company | Maltese Company 2012 2011 2012 2011 Net sales $1,549,035 $339,038 Cost of goods sold 1,080,490 241,000 Operating expenses 302,275 79,000 Interest expense 8,980 2,252 Income tax expense 54,500 6,650 Current Assets 325,975 312,410 83,336 79,467 Common Stock, $10 par 500,000 500 ,000 120,000 120,000 Retained earnings 173,460 146,595 38,096 28,998 Long-term Debts 108,500 90,000 29,620 25,000 Current liabilities 65,325 75,815 35,348 30,281 a) Complete the common-size 2012 income statements for Donovan and Maltese below. Donovan Company Maltese Company Condensed Income Condensed Income Statement Statement For the Year Ended For the Year Ended December 31, 2012 December 31, 2012 Dollars % Dollars % Net sales $1,549,035 $339,038 Cost of goods sold 1,080,490 241,000 Gross Prot Operating Expenses 302,275 79,000 Income from operations Interest expense 8,980 2,252 Income before income taxes Income tax expense 54,500 6,650 Net income b) Comment on their protability. c) Assume deprecation expenses for 2012 are $3,000 and $600 for Donovan and Maltese respectively, and cash balances are zero for both companies in 2011 and 2012. Which company is more likely to be at the maturity stage? Why