Question

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

The following income statements were drawn from the annual reports of the Atlanta Company and the Boston Company:

Atlanta* Boston*
Net sales $ 35,600 $ 89,700
Cost of goods sold (16,720 ) (62,520 )
Gross margin 18,880 27,180
Less: Operating exp.
Selling and admin. exp. (11,960 ) (19,830 )
Net income $ 6,920 $ 7,350


*All figures are reported in thousands of dollars.

Required
a-1. Compute the gross margin percentages and return-on-sales ratios of Atlanta and Boston. (Round your answers to the nearest whole number.)
a-2. Ascertain which of the company is a high-end retailer based on ratios computed.
b. If Atlanta and Boston have equity of $18,000 and $21,000, respectively, which company is in the more profitable business?

Compute the gross margin percentages and return-on-sales ratios of Atlanta and Boston.
Atlanta Boston
Gross margin percentages % %
Return-on-sales ratios % %

Ascertain which of the company is a high-end retailer based on ratios computed.
Ascertain which of the company is a high-end retailer based on ratios computed.

If Atlanta and Boston have equity of $18,000 and $21,000, respectively, which company is in the more profitable business?
Which company is in the more profitable business?
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