In: Accounting
Gross Profit Percentage
The following financial data is from Hi-Tech Instruments' financial
statements (thousands of dollars, except earnings per share.)
2016 | |
---|---|
Sales revenue | $209,500 |
Cost of goods sold | 125,500 |
Net income | 8,300 |
Dividends | 2,600 |
Earnings per share | 4.15 |
Hi-Tech
Instruments, Inc. Balance Sheet |
||
---|---|---|
(Thousands of Dollars) |
Dec. 31, 2016 | Dec. 31, 2015 |
Assets | ||
Cash | $18,300 | $18,000 |
Accounts receivable (net) | 46,000 | 41,000 |
Inventory | 39,500 | 43,700 |
Total current assets | 103,800 | 102,700 |
Plant assets (net) | 52,600 | 50,500 |
Other assets | 15,600 | 13,800 |
Total assets | $172,000 | $167,000 |
Liabilities and Stockholders' Equity | ||
Notes payable-banks | $6,000 | $6,000 |
Accounts payable | 22,500 | 18,700 |
Accrued liabilities | 16,500 | 21,000 |
Total current liabilities | 45,000 | 45,700 |
9% Bonds payable | 40,000 | 40,000 |
Total liabilities | 85,000 | 85,700 |
Common stock, $25 par value (2,000,000 shares) | 50,000 | 50,000 |
Retained earnings | 37,000 | 31,300 |
Total stockholders' equity | 87,000 | 81,300 |
Total liabilities and stockholders' equity | $172,000 | $167,000 |
Industry Average Ratios for Competitors | |
---|---|
Quick ratio | 1.3 |
Current ratio | 2.4 |
Accounts receivable turnover | 5.9 times |
Inventory turnover | 3.5 times |
Debt-to-equity ratio | 0.73 |
Gross profit percentage | 42.8 percent |
Return on sales | 4.5 percent |
Return on assets | 7.6 percent |
Calculate the company's gross profit percentage for 2016.
Round answer to one decimal place. (Ex.: 0.2345 = 23.5%)
Answer%
Compare the result to the industry average.
Hi-Tech Instruments' ratio is higher than the industry average.
Hi-Tech Instruments' ratio is lower than the industry average.
Calculation of Gross Profit Percentage of Hi-Tech Instruments for the year 2016
Gross Profit = Sales – Cost of Goods sold
= $ 2,09,500 - $ 1,25,500
= $ 84,000
Gross Profit Percentage = [ $ 84,000 / $ 2,09,500 ] * 100
= 40.10 %
Comparison of Gross Profit Percentage to the industry average
Hi-Tech Instruments GP Ratio = 40.10%
Industry Average GP Ratio = 42.80%
Conclusion : Hi-Tech Instruments' ratio is lower than the industry average.