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In: Finance
Calculating Gross Profit Margin and Inventory Turnover The following table presents sales revenue, cost of goods...
Calculating
Gross Profit Margin and Inventory Turnover
The following table presents sales revenue, cost of goods sold, and
inventory amounts for three retailers of fine jewelry, Tiffany
& Co., Zale Corporation, and Blue Nile, Inc. (an Internet
retailer).
| ($ millions) | 2013 | 2012 |
|---|---|---|
| Tiffany & Co. | ||
| Revenues | $4,585 | $4,017 |
| Cost of goods sold | 1,776 | 1,674 |
| Inventory | 2,489 | 2,347 |
| Zale Corporation | ||
| Revenues | $1,973 | $1,910 |
| Cost of goods sold | 989 | 949 |
| Inventory | 823 | 769 |
| Blue Nile, Inc. | ||
| Revenues | $505 | $443 |
| Cost of goods sold | 451 | 368 |
| Inventory | 90 | 60 |
a. Compute the gross profit margin (GPM) for each of these
companies for 2013 and 2012.
Note: Round GPM answers to one decimal place (ex:
0.2345 = 23.5%).
| Tiffany | Zale | Blue Nile | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||
| Gross profit | Answer | Answer | Answer | Answer | Answer | Answer | ||||||
| Gross profit margin (GPM) | Answer |
% |
Answer | % | Answer | % | Answer | % | Answer | % | Answer | % |
b. Compute the inventory turnover ratio and the average inventory
days outstanding for 2013 for each company.
Do not round until your final answer.
Round inventory turnover to one decimal place. Round average inventory days outstanding to nearest whole number.
| Tiffany | Zale | Blue Nile | |
|---|---|---|---|
| Inventory turnover | Answer | Answer | Answer |
| Avg. inventory days outstanding | Answer | Answer | Answer |
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Calculating Gross Profit Margin and Inventory Turnover The following table presents sales revenue, cost of goods...
Calculating Gross Profit Margin and Inventory Turnover
The following table presents sales revenue, cost of goods sold, and
inventory amounts for three retailers of fine jewelry, Tiffany
& Co., Zale Corporation, and Blue Nile, Inc. (an Internet
retailer).
($ millions)
2013
2012
Tiffany & Co.
Revenues
$4,231
$3,974
Cost of goods sold
1,766
1,664
Inventory
2,477
2,335
Zale Corporation
Revenues
$1,963
$1,900
Cost of goods sold
979
939
Inventory
813
759
Blue Nile, Inc.
Revenues
$495
$433
Cost of goods...
alculating Gross Profit and Inventory Turnover The following table presents sales revenue, cost of goods sold,...
alculating Gross Profit and Inventory
Turnover
The following table presents sales revenue, cost of goods sold, and
inventory amounts for three computer/electronics companies, Dell
Inc., Hewlett-Packard Company, and Apple Inc.
$ millions
Fiscal year ending
Samsung Electronics Co. Ltd. (S. Korean
won)
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Revenues
203,205,987
225,692,667
198,103,613
Cost of goods sold
126,278,800
135,696,309
124,651,931
Inventory
15,817,504
17,634,868
16,247,413
Hewlett-Packard Company (US dollar)
Oct. 31, 2014
Oct. 31, 2013
Oct. 31, 2012
Revenues...
Using LIFO, calculate ending inventory, cost of goods sold, sales revenue, and gross profit.
Exercise 6-4A Calculate inventory amounts when costs are rising
(LO6-3)During the year, TRC Corporation has the following inventory
transactions.DateTransactionNumber of UnitsUnit CostTotal CostJan.1Beginning inventory52$44$2,288Apr.7Purchase132466,072Jul.16Purchase202499,898Oct.6Purchase112505,600498$23,858For the entire year, the company sells 432 units of inventory
for $62 each.Exercise 6-4A Part 22. Using LIFO, calculate ending inventory, cost
of goods sold, sales revenue, and gross profit.
1. Using FIFO, calculate ending inventory, cost of goods sold, sales revenue, and gross profit.
During the year, TRC Corporation has the following inventory transactions. Date Transaction Number of Units Unit Cost Total Cost Jan. 1 Beginning inventory 60 $ 52 $ 3,120 Apr. 7 Purchase 140 54 7,560 Jul. 16 Purchase 210 57 11,970 Oct. 6 Purchase 120 58 6,960 530 $ 29,610 For the entire year, the company sells 450 units of inventory for $70 each.
1. Using FIFO, calculate ending inventory, cost of goods sold, sales revenue, and gross profit.
2. Using...
Problem 6-2A Calculate ending inventory, cost of goods sold, sales revenue, and gross profit for four...
Problem 6-2A Calculate ending inventory, cost of goods sold,
sales revenue, and gross profit for four inventory methods (LO6-3,
6-4, 6-5)
[The following information applies to the questions
displayed below.]
Greg’s Bicycle Shop has the following transactions related to its
top-selling Mongoose mountain bike for the month of March.
Greg's Bicycle Shop uses a periodic inventory system.
Date
Transactions
Units
Unit
Cost
Total Cost
March
1
Beginning inventory
20
$
250
$
5,000
March
5
Sale ($400
each)
15
March...
Problem 6-2A Calculate ending inventory, cost of goods sold, sales revenue, and gross profit for four...
Problem 6-2A Calculate ending inventory, cost of goods sold,
sales revenue, and gross profit for four inventory methods (LO6-3,
6-4,6-5) [The following information applies to the questions
displayed below.] Greg’s Bicycle Shop has the following
transactions related to its top-selling Mongoose mountain bike for
the month of March. Greg's Bicycle Shop uses a periodic inventory
system.
Date
Transactions
Units
Unit Cost
Total Cost
March 1
Beginning Inventory
20
$215
$4,300
March 5
Sale ($330 each)
15
March 9
Purchase
10...
Problem 6-2B Calculate ending inventory, cost of goods sold, sales revenue, and gross profit for four...
Problem 6-2B Calculate ending inventory, cost of goods sold,
sales revenue, and gross profit for four inventory methods (LO6-3,
6-4, 6-5)
[The following information applies to the questions
displayed below.]
Pete’s Tennis Shop has the following transactions related to its
top-selling Wilson tennis racket for the month of August.
Pete’s Tennis Shop uses a periodic inventory system.
Date
Transactions
Units
Unit Cost
Total Cost
August
1
Beginning inventory
8
$
152
$
1,216
August
4
Sale ($185 each)
5
August...
Required information Problem 6-2B Calculate ending inventory, cost of goods sold, sales revenue, and gross profit...
Required information
Problem 6-2B Calculate ending inventory, cost of goods sold,
sales revenue, and gross profit for four inventory methods (LO6-3,
6-4, 6-5)
[The following information applies to the questions
displayed below.]
Pete’s Tennis Shop has the following transactions related to its
top-selling Wilson tennis racket for the month of August.
Pete’s Tennis Shop uses a periodic inventory system.
Date
Transactions
Units
Unit Cost
Total Cost
August
1
Beginning inventory
8
$
156
$
1,248
August
4
Sale ($205 each)...
Required information Problem 6-2B Calculate ending inventory, cost of goods sold, sales revenue, and gross profit...
Required information
Problem 6-2B Calculate ending inventory, cost of goods sold,
sales revenue, and gross profit for four inventory methods (LO6-3,
6-4, 6-5)
[The following information applies to the questions
displayed below.]
Pete’s Tennis Shop has the following transactions related to its
top-selling Wilson tennis racket for the month of August.
Pete’s Tennis Shop uses a periodic inventory system.
Date
Transactions
Units
Unit Cost
Total Cost
August
1
Beginning inventory
8
$
152
$
1,216
August
4
Sale ($185 each)...
Large retailers like Costco and Target typically use gross margin ratio (gross margin sales), inventory turnover
Inventory Management Metrics Large retailers like Costco and Target typically use gross margin ratio (gross margin sales), inventory turnover (sometimes referred to as inventory tums), and gross margin return on investmient (GMROI) to evaluate how well inventory has been managed. The goal is to maximize profits while minimixing the investment in inventory. Below are data for four scenarios, a base scenario (A) followed by there modifications (B, C, & D) to the base scenario. Required For each scenario calculate the gross margin percent,...
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