State the reasons for the relative levels of ROA among Company P and Corporation S and analyze the data to the maximum depth allowed by the information provided and speculate on economic explanations for the indication of analysis.

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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. LOADING... (Click the icon to view the comparative income statements.) Golden Fence is the larger company based on sales and total assets, so you perform the following steps to compare and analyze the companies. Read the requirements LOADING... . Requirement a. Prepare common-size income statements. Comment on differences in the relative size of each line item. (Round percentages to the nearest tenth of a percent, X.X%.) Percent of Sales Golden Fence Stone Wall Golden Fence Stone Wall (amounts in millions) Company Corporation Company Corporation Sales $987,236 $67,450 % % Cost of goods sold 678,626 43,370 % % Gross profit 308,610 24,080…

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Chapter 4, Problem 1BAIC

To determine

State the reasons for the relative levels of ROA among Company P and Corporation S and analyze the data to the maximum depth allowed by the information provided and speculate on economic explanations for the indication of analysis.

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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. LOADING... (Click the icon to view the comparative income statements.) Golden Fence is the larger company based on sales and total assets, so you perform the following steps to compare and analyze the companies. Read the requirements LOADING... . Requirement a. Prepare common-size income statements. Comment on differences in the relative size of each line item. (Round percentages to the nearest tenth of a percent, X.X%.) Percent of Sales Golden Fence Stone Wall Golden Fence Stone Wall (amounts in millions) Company Corporation Company Corporation Sales $987,236 $67,450 % % Cost of goods sold 678,626 43,370 % % Gross profit 308,610 24,080…

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