Question

Common-size financial statements. Prepare​ common-size income statements for Walmart and Starbucks using the January 2015 and September 2014 information in the popup​ window: Which company is doing a better job of getting sales dollars to net​ income? Where is the one company having an advantage over the other company in turning revenue into net​ income?

Complete the table​ below: (Round to two decimal places. Net income to three decimal​ places.)

Abbreviated Income Statements ($ in Millions)
Company	Walmart, Inc.			Starbucks
Account	1/31/2015			9/30/2014
Sales	$491,807	Answer	%	$16,703	Answer	%
Cost of goods sold	$-370,410	Answer	%	$-7,217	Answer	%
Selling, general, and administrative expenses	$-94,693	Answer	%	$-11,541	Answer	%
EBIT	$26,704	Answer	%	$-2,055	Answer	%
Interest expense	$-2,321	Answer	%	$ -17	Answer	%
Taxes	$-9,022	Answer	%	$ 767	Answer	%
Net income	$15,361	Answer	%	$-1,305	Answer	%

Answer 1

Abbreviated Income Statements ($ in Millions)
Company	Walmart, Inc.		Starbucks
Account	1/31/2015	%	9/30/2014	%
Sales	$    4,91,807.00	100.00%	$   16,703.00	100.00%
Cost of goods sold	$ (3,70,410.00)	-75.32%	$   (7,217.00)	-43.21%
Selling, general, and administrative expenses	$     (94,693.00)	-19.25%	$(11,541.00)	-69.10%
EBIT	$       26,704.00	5.43%	$   (2,055.00)	-12.30%
Interest expense	$       (2,321.00)	-0.47%	$         (17.00)	-0.10%
Taxes	$       (9,022.00)	-1.83%	$         767.00	4.59%
Net income	$       15,361.00	3.12%	$   (1,305.00)	-7.81%

In Starbucks EBIT is loss so tax amount is in positive because due to loss there is a saving in tax.

Which company is doing a better job of getting sales dollars to net​ income?

Walmart is doing better job.

Where is the one company having an advantage over the other company in turning revenue into net​ income?

Walmart is having advantage due to lower selling and administrative expenses.