Calculation of Gross Profit for Best Buy and Circuit City The following information was summarized from the 2007 and 2006 consolidated statements of income of Best Buy, Inc. (for the years ended March 3, 2007 and February 25, 2006) and Circuit City (for the years ended February 28, 2007 and February 28, 2006). For each company, years are labeled as 2007 and 2006, respectively.

Required 1. Calculate the gross profit ratios for Best Buy and Circuit City for 2007 and 2006.
2. Which company appears to be performing better? What factors might cause the difference in the gross profit ratios of the two companies? What other information should you consider to determine how these companies are performing in this regard?

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2007 2006 (in Millions) Sales* Cost of Goods Sold** Sales* Cost of Goods Sold** Best Buy $35,934 Circuit City $12,430 $27,165 $ 9,501 $30,848 $23,122 11,514 8,704 *Described as "Revenue" by Best Buy and as "Net Sales" by Circuit City. **Described as "cost of sales, buying and warehousing" by Circuit City.