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Penny Saver Inc. and Buy 4 Less Stores are both discount retailers. As their adapted income ...

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Penny Saver Inc. and Buy 4 Less Stores are both discount retailers. As their adapted income ...

Penny Saver Inc. and Buy 4 Less Stores are both discount retailers. As their adapted income statements (in $ millions) for 2021 show, Penny Saver sales revenue and net income were more than three times those amounts of Buy 4 Less.

Penny Saver

Buy 4 Less

Sales	$4,644.9	$1,302.9
Cost of goods sold	3,052.7	791.0
Gross profit	1,592.2	511.9
Selling, general & administrative expenses	1,226.4	498.9
Net operating income	365.8	13.0
Other expense	6.7	.4
Income before taxes	359.1	12.6
Income tax expense	129.6	4.1
Net income	$ 229.5	$ 8.5

Required:

a.	Prepare a common-size income statement for each company. Express all percentages

using one decimal place. Your answers may not add perfectly due to rounding.

b.	Which company did the better job of managing expenses? How did you reach your

conclusion?

Textbook

Managerial Accounting

Edition: 4^th

Author: Davis

Read 33 times

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