The following income statements were drawn from the annual reports of Design Company and Royal Company.

Required
a. One of the companies is a high-end retailer that operates in exclusive shopping malls. The other operates discount stores located in low-cost stand-alone buildings. Identify the high-end retailer and the discounter. Support your answer with appropriate ratios.
b. If Design and Royal have equity of $40,000 and $21,000, respectively, which company is the moreprofitable?

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Design Royal S5,700 $52,300 Net Sales Cost of Goods Sold Gross Margin 68,90031,400 20,900 Less: Selling and Admin. Expenses 22000 18,800 S 4,800 2,100 26,800 Net Income