Trans Canada Motors Ltd. and X Country Trucks Inc. are competitors. The companies reported the following amounts,

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Trans Canada Motors Ltd. and X Country Trucks Inc. are competitors. The companies reported the following amounts, in millions. In January 2017, you wish to make an investment in one of these companies. Results for 2016 are not yet available.

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Requirements

1. Compute both companies' gross profit percentage and their rates of inventory turnover during 2015 and 2014.

2. Can you tell from these statistics which company should be more profitable in percentage terms? Why? What other important category of expenses do the gross profit percentage and the inventory turnover ratio fail to consider?

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Related Book For  book-img-for-question

Financial Accounting

ISBN: 978-0134564142

6th Canadian edition

Authors: Walter Jr. Harrison, Charles T. Horngren, C. William Thomas, Greg Berberich, Catherine Seguin

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