Refer to the income statements for Under Armour and Columbia Sportswear reproduced at the back of the book. Required 1. Which is the largest expense for each company in the most recent year? What is...

Refer to the income statements for Under Armour and Columbia Sportswear reproduced at the back of the book.

Required

1. Which is the largest expense for each company in the most recent year? What is its dollar amount? Is it logical that this would be the largest expense given the nature of each company’s business? Explain your answer.

2. One of the accounts on each company’s income statement is ‘‘Selling, general and administrative expenses.’’ For each of the two most recent years, compute the ratio of this expense to net sales (Under Armour calls this ‘‘Net revenues’’) for each company. Did this ratio increase or decrease from one year to the next? Which company has the lower ratio in each of the two years?

3. Compute the ratio of income tax expense (Under Armour uses the term ‘‘Provision for income taxes’’) to income before income taxes for the two most recent years for each company. Is the ratio the same for Under Armour for both years? Is the ratio the same for Columbia Sportswear for both years? Which company has the higher ratio for each of the two years?