Problem: Profitability analysis for two types of retailers. Information taken from recent annual reports of two retailers appears as follows (amounts in millions). One of these companies is Family Dollar Stores, a discount store chain, and the other is Abercrombie & Fitch, a specialty retailer of apparel. The income tax rate is 35%. Indicate which of these companies Family Dollar Stores is and which is Abercrombie & Fitch. Explain your reasoning using appropriate financial ratios.
Company A Company B
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,750 $6,834
Interest Expense. . . . . . . . . . . . . . . . . . . . . . 1 17
Net Income . . . . . . . . . . . . . . . . . . . . . . . . .476 243
Average Total Assets . . . . . . . . . . . . . . . . . 2,458 2,574