Problem -
Common-size percentages are often used to compare the statements of companies of unequal size. The condensed income statements of Companies A and B are given below. Enter in the spaces provided the amounts expressed in common-size percentages.
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Company A and Company B Income Statements for Year Ended December 31, 2007
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Dollar Amounts
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Common-Size Percentages
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Company A
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Company B
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Company A
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Company B
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Sales
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$450,000
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$525,000
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Cost of goods sold
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261,000
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210,000
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Gross margin
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$189,000
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$315,000
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Selling expenses
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$81,000
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$89,250
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Administrative expenses
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45,000
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52,500
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Total operating expenses
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$126,000
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$141,750
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Income
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$63,000
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$173,250
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After expressing the amounts of the income statements in common-size percentages, examine them and name the company that operated more efficiently.