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Prepare Common$-$Size Financial Statements for Competitors

ANALYST ADJUSTMENTS $2\mathrm{.}1$&$2\mathrm{.}3$

Following are selected income statement and balance sheet data from two European grocery chain companies: Tesco PLC $($UK$)$ and Ahold Delhaize $($the Netherlands$).$

$\backslash$table$[[\backslash$table$[[$Income Statements$],[$For Fiscal Year Ended$]],\backslash$table$[[$Tesco$],[($ millions$)]],\backslash$table$[[$Ahold Delhaize$],[($ millions$)]]],[\backslash$table$[[$Sales$.],[$Cost of goods sold$]],\backslash$table$[[\backslash$table$[[63,911],[59,767]]]],\backslash$table$[[\backslash$table$[[],[60,850]]]]],[\backslash$table$[[$Gross profit. $..],[$Total expenses$]],\backslash$table$[[\backslash$table$[[4,144],[2,824]]]],\backslash$table$[[17,067],[17,411]]],[$Net income,$1,320,(344)]]$

$\backslash$table$[[$Balance Sheet,$\backslash$table$[[$Tesco$],[$pg$.2\mathrm{.}50,$ millions$)]],\backslash$table$[[$Ahold Delhaize$],[($ millions$)]]],[$Current assets,$12,668,18,670],[$Long$-$term assets,$36,379,28,708],[$Total assets.,$49,047,47,378],[$Current liabilities.,$20,680,23,162],[$Long$-$term liabilities,$13,533,12,930],[$Total liabilities,$34,213,36,092],[$Stockholders$\text{'}$ equity,$14,834,11,286],[$Total liabilities and equity,$49,047,47,378]]$

a$.$ Prepare a common size income statement. To do this, each income statement amount as a percent of sales. comment on any differences observed between the two companies.

B$.$ Prepare a common size balance sheet. to do this, express each balance sheet amount as a percent of total assets. comment on any differences observed between the two companies.

C$.$ Which company has chosen to structure itself with a higher proportion of equity $($and a lower proportion of debt$)?$ how does this capital structure decision affect our assessment of the relative riskiness of these two companies?

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