Comparative financial statement data for Alba Ltd. and Matera Ltd., two competitors, follow:

Required 

a. Prepare a common-size analysis of the 2024 statement of income data for Alba Ltd. and Matera Ltd. 

b. Calculate the return on assets and the return on shareholders’ equity for both companies. 

c. Comment on the relative profitability of these companies. 

d. Based on your calculations above, identify two main reasons for the difference in their profitability.

Net sales Cost of goods sold Operating expenses Interest expense Income tax expense Current assets Capital assets (net) Current liabilities Long-term liabilities Share capital Retained earnings Alba Ltd. 2024 $1,225,000 398,000 70,000 2,255 13,460 1,102,000 1,760,000 265,000 780,000 973,715 843,285 2023 $ 998,000 1,655,000 900,000 665,000 895,000 193,000 Matera Ltd. 2024 $897,000 623,000 65,000 2,450 6,700 295,000 648,250 86,400 125,000 375,000 356,850 2023 $175,000 510,000 67,000 86,000 375,000 157,000