Compare common-size income statements of two companies
Response to the following problem:
Kraft, Inc., and Claire Corporation are competitors. Compare the two companies by converting their condensed income statements to common size.
|
(In millions )
|
Kraft
|
Claire
|
|
Net sales...............................................................
|
$18,700
|
$7,869
|
|
Cast of goods sold .......... .... ............... ..............
|
10,573
|
4,963
|
|
Selling and administrative expenses..................
|
4,895
|
1,521
|
|
Interest expense...................................................
|
53
|
23
|
|
Other expenses...................................
|
89
|
38
|
|
Income tax expense ......................
|
730
|
250
|
|
Net income........................
|
$ 2,360
|
$1,072
|
Which company earned more net income? Which company's net income was a higher percentage of its net sales? Explain your answer.