Question

Aeropostale, Inc., is a mall-based specialty retailer of casual apparel and accessories. The company concept is to provide the customer with a focused selection of high-quality, active-oriented fashions at compelling values. The items reported on its income statement for an earlier year (ended March 31) are presented here (dollars in thousands) in simplified form in alphabetical order:

Cost of goods sold	$	1,733,916
Interest expense		417
Net revenue		2,342,260
Other selling, general, and administrative expenses		494,829
Provision for income taxes		43,583
Weighted average shares outstanding		81,208

Required:

a. Prepare a classified (multiple-step) consolidated income statement (showing gross profit, operating income, and income before income taxes). Include a presentation of basic earnings per share.

b. What is the gross profit percentage?

Answer 1

Solution: A
	MULTIPLE STEP - INCOME STATEMENT
		Amount	Amount
	Revenue
	Sales Revenue	$        2,342,260
	Cost of Goods Sold	$        1,733,916
	Gross Profit		$          608,344
	Less: Operating Expenses
	Other Selling, General , and administrative Expenses	$            494,829
	Total Operating Expenses		$          494,829
	Operating Income (Loss)		$          113,515
	Non-Operating and others
	Interest Expenses		$                   417
	Income Before income taxes		$          113,098
	Less: Income Tax Expenses		$             43,583
	Net Income		$             69,515
	Divide B		"/" By
	Weighted Average Shares Outstanding		81,208
	Basic Earning Per Shares		$                 0.86	Per Share
Solution: B
	Calculation of Gross Profit Percentage
	Gross Profit Percentage =	Gross Profit	"/" By	Net Revenue
	Gross Profit Percentage =	$            608,344	"/" By	$     2,342,260
	Gross Profit Percentage =	25.97%
	Answer = 25.97% or 26%