21. [Effect of LIFO liquidations on gross margins] The follow- ing data were obtained from annual reports of Stride-Rite [SRR]. a shoe manufacturer and retailer Years Finded December 31 (in Sthousands) Sales COGS Gross profit LIFO liquidation (net of tax) 1997 1998 1999 $515.728 $539.413 5.572.696 (328,172) (348.587) (362,108) $187,556 5190.826 $210,588 $ 3,379 $ 1,733 0

a. Compute the gross margin percentage for each year, 1907-1999

b. Stride-Rite disclosed the effect of LIFO liquidations net of income tax Assuming a tax rate of 35%, recompute Stride- Rite's gross margin for the years 1997 1999 after removing the effect of I IF() liquidations.

c. Ixplain why the trend in gross margins shown in part b is a better indictor of Sunde-Rite's performance than the reported gross margins