The Golden Fence Company and Stone Wall Corporation are competitors in manufacturing walls and fences. You are interested in comparing the two firms€™ profitability. Their income statements and other information are presented below.

Golden Fence is the larger company based on sales and total assets, so you perform the following steps to compare and analyze the companies.
Required
a. Prepare common- size income statements. Comment on differences in the relative size of each line item.
b. Compute profit margin, return on assets, and return on stockholders€™ equity. Which company appears more profitable?

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Golden Fence Stone Wall Company Corporation amounts in millions Sales Cost of Goods Sold Gross Profit Selling. General, and Administrative Expenses Other Operating Expenses Interest Expense Earnings Before Provision for Taxes Provision for Taxes Net Income Average Total Assets Average Stockholders Equity S 987236 678,626 308,610 58,636 12,344 24,699 212,941 74,529 S 138,412 S1,258,287 S 654,309 67450 43,370 24.080 2,408 722 193 20,757 7265 $ 13,492 $102.211 S 74,614