Managerial Accounting
15th Edition
ISBN: 9781337912020
Author: Carl Warren, Ph.d. Cma William B. Tayler
Publisher: South-Western College Pub
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Chapter 16, Problem 8DQ
To determine
Identify the cause for the difference between the industry’s price earnings ratio and Company KR’s price earnings ratio.
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Swank Clothiers had sales of $383,000 and cost of goods sold of $260,000.
What is the gross profit margin (ratio of gross profit to sales)?
b. If the average firm in the clothing industry had a gross profit of 25 percent? how is the firm doing?
SOLVE BOTH QUESTIONS
Smith Corporation had Sales of $2,350,000 in 2021 and $2,125,000 in 2020. Cost of Good Sold were $1,400,000 in 2021 and $1,325,000 in 2020.
a. What was the percentage change in Sales year to year?
b. What was the percentage change in Cost of Goods Sold year to year?
c. Relative to the percentage in Sales, would you say the percentage change on Cost of Goods Sold was favorable or unfavorable?
d. Is this an example of horizontal or vertical analysis?
Which of the following statements is correct?
When cost of goods sold as a percentage of sales increases, the gross profit margin will increase.
If the gross profit margin increases from one year to the next, then the net profit margin will also increase from one year to the next.
If the gross profit margin is the same for the current and past year, then sales and cost of goods sold in dollars did not change.
It is possible that when cost of goods sold in dollars increases, cost of goods sold as a percentage of sales decreases.
Chapter 16 Solutions
Managerial Accounting
Ch. 16 - Prob. 1DQCh. 16 - What is the advantage of using comparative...Ch. 16 - Prob. 3DQCh. 16 - Prob. 4DQCh. 16 - Prob. 5DQCh. 16 - What do the following data, taken from a...Ch. 16 - Prob. 7DQCh. 16 - Prob. 8DQCh. 16 - The dividend yield of Suburban Propane Partners,...Ch. 16 - Prob. 10DQ
Ch. 16 - Prob. 1BECh. 16 - Prob. 2BECh. 16 - The following items are reported on a companys...Ch. 16 - Prob. 4BECh. 16 - Prob. 5BECh. 16 - Prob. 6BECh. 16 - Prob. 7BECh. 16 - Prob. 8BECh. 16 - Prob. 9BECh. 16 - Prob. 10BECh. 16 - Prob. 11BECh. 16 - Prob. 1ECh. 16 - The following comparative income statement (in...Ch. 16 - Prob. 3ECh. 16 - Prob. 4ECh. 16 - Prob. 5ECh. 16 - The following data were taken from the balance...Ch. 16 - PepsiCo, Inc. (PEP), the parent company of...Ch. 16 - Current position analysis The bond indenture for...Ch. 16 - Prob. 9ECh. 16 - Accounts receivable analysis Xavier Stores Company...Ch. 16 - Prob. 11ECh. 16 - Prob. 12ECh. 16 - Ratio of liabilities to stockholders equity and...Ch. 16 - Hasbro, Inc. (HAS), and Mattel, Inc. (MAT), are...Ch. 16 - Recent balance sheet information for two companies...Ch. 16 - Prob. 16ECh. 16 - Prob. 17ECh. 16 - Prob. 18ECh. 16 - Prob. 19ECh. 16 - Prob. 20ECh. 16 - Prob. 21ECh. 16 - Prob. 22ECh. 16 - Prob. 23ECh. 16 - Prob. 24ECh. 16 - Prob. 25ECh. 16 - Comprehensive income Anson Industries, Inc.,...Ch. 16 - Prob. 1PACh. 16 - Prob. 2PACh. 16 - Prob. 3PACh. 16 - Measures of liquidity, solvency, and profitability...Ch. 16 - Prob. 5PACh. 16 - Prob. 1PBCh. 16 - Prob. 2PBCh. 16 - Prob. 3PBCh. 16 - Prob. 4PBCh. 16 - Prob. 5PBCh. 16 - Prob. 1MADCh. 16 - Prob. 2MADCh. 16 - Deere Company (DE) manufactures and distributes...Ch. 16 - Marriott International, Inc. (MAR), and Hyatt...Ch. 16 - Prob. 1TIFCh. 16 - Real-world annual report The financial statements...Ch. 16 - Prob. 3TIF
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- Tech Company is a medium-sized consumer electronics retailer. The company reported $155,000,000 in revenues for 2007 and $110,050,000 in Costs of Goods Sold (COGS). In the same year, Tech Co. held an average of $16705510in inventory. Inventory cost at Tech Co. is 27 percent per year. What is the per unit inventory cost ($) for an MP3 player sold at $46? Assume that the margin corresponds to the retailer’s average margin.arrow_forwardPedee Companys inventory turnover in days is 80 days. Which of the following actions could help to improve that ratio? a. Increase the sales price. b. Increase manufacturing costs. c. Reduce the cost of goods sold. d. Reduce average inventory. e. All of these.arrow_forwardLast year, Nikkola Company had net sales of 2,299,500,000 and cost of goods sold of 1,755,000,000. Nikkola had the following balances: Refer to the information for Nikkola Company above. Required: Note: Round answers to one decimal place. 1. Calculate the average inventory. 2. Calculate the inventory turnover ratio. 3. Calculate the inventory turnover in days. 4. CONCEPTUAL CONNECTION Based on these ratios, does Nikkola appear to be performing well or poorly?arrow_forward
- CP Jenney Stores generates $13,765,230 in sales, $8,735,429 in net profit, and 25% in gross margin. What percentage of sales is cost of goods sold? Hint: vertical analysis.arrow_forwardThe following information is available to you for the Wooden Company: 2011 2010 Net Income. 53,394 39,510 Net Sales 233,715 182,795 From the information provided, calculate Wooden’s profit margin ratio for each year. Be sure to show your calculations. 2011 2010 Comment on the results, assuming that the industry average for the profit margin ratio is 25% for each of the two years.arrow_forwardFor a recent year Best Buy (BBY) reported sales of $39,528 million. It's gross profit was $9,191 million. What was the amount of Best Buy's cost of goods sold?arrow_forward
- In early 2019, the following information was true about Abercrombie and Fitch (ANF) and The Gap (GPS), both clothing retailers. Values (except price per share) are in millions of dollars. a. What is the market-to-book ratio of each company? b. What conclusion do you draw from comparing the two ratios? a. What is the market-to-book ratio of each company? The market-to-book ratio for ANF is enter your response here . (Round to two decimal places.) Part 2 The market-to-book ratio for GPS is enter your response here . (Round to two decimal places.) b. What conclusion do you draw from comparing the two ratios? (Select from the drop-down menus.) It implies that the market has a more favorably outlook on ▼ than on ▼ .arrow_forwardUse the following selected information from Corolla to determine the Year 1 and Year 2 trend percentages for net sales using Year 1 as the base. Year 2 Year 1 Net sales $ 277,700 $ 231,700 Cost of goods sold 151,600 129,890 Operating expenses 54,940 52,940 Net earnings 28,320 20,120 Multiple Choice 116.7% for Year 2 and 100.0% for Year 1. 54.6% for Year 2 and 56.1% for Year 1. 36.2% for Year 2 and 40.8% for Year 1. 65.6% for Year 2 and 64.6% for Year 1. 119.9% for Year 2 and 100.0% for Year 1.arrow_forwardIf food sales are $160,000 and beverage sales are $40,000, what is the sales mix expressed as a percentage?arrow_forward
- Profit margins and turnover ratios vary from one industry to another. What differences would you expect to find between a grocery chain, such as Safeway, and a steel company? Think particularly about the turnover ratios and the profit margin, and consider the effect on the DuPont equation.arrow_forwardOur company is a manufacturer and has the following data available for the current year: sales, $550,000; sales discounts, $20,000; sales returns and allowances, $15,000; and cost of goods sold, $200,000. What is the amount reported on the income statement for net sales? $530,000 $515,000 $500,000 $330,000arrow_forwardRevenue and expense data for the current calendar year for Tannenhill Company and for the electronics industry are as follows. The Tannenhill’s data are expressed in dollars. The electronics industry averages are expressed in percentages. 1 Tannenhill Company Electronics Industry Average 2 Sales $4,060,000.00 100.0% 3 Cost of goods sold 2,111,200.00 58.0 4 Gross profit $1,948,800.00 42.0% 5 Selling expenses $1,055,600.00 23.0% 6 Administrative expenses 649,600.00 14.0 7 Total operating expenses $1,705,200.00 37.0% 8 Operating income $243,600.00 5.0% 9 Other income 118,000.00 2.9 10 $361,600.00 7.9% 11 Other expense 72,000.00 1.8 12 Income before income tax $289,600.00 6.1% 13 Income tax expense 78,000.00 1.9 14 Net income $211,600.00 4.2% A. Prepare a common-sized income statement comparing the results of operations for Tannenhill Company with the industry average. Round percentages to one decimal place. Enter all amounts as positive numbers. B. As far as the data permit, comment…arrow_forward
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