The 2017 financial statements of LVMH Moet Hennessey-Louis Vuitton S.A. are presented in Appendix C at the end of this book. LVMH is a Paris-based holding company and one of the world's largest and best-known luxury goods companies. As members of the European Union, French companies are required to prepare their consolidated (group) financial statements using International Financial Reporting Standards (IFRS). Using the company's financial statements, calculate the company's

(a) gross profit percentage 

(b) return on sales ratio for 2016 and 2017. Comment on the trend in the company's profitability over the two-year period.

Appendix C

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CONSOLIDATED INCOME STATEMENT (EUR millions, except for earnings per sharel Notes 2017 2016 2015 Revenue Cost of sales 23 42,636 37,600 (14,783) (13,039) 35,664 (12,553) Gross margin 27,853 24,561 23,111 Marketing and selling expenses (16,395) [14,607) (13,830) General and administrative expenses (3,162) (2,931) [2,663) Income (loss) from joint ventures and associates 7 (3) 3 (13) Profit from recurring operations 23-24 8,293 7,026 6,605 Other operating income and expenses 25 [180] [122] (221) Operating profit 8,113 6,904 6,384 Cost of net financial debt [62] (83) [78] Other financial income and expenses (117) (349) (336) Net financial income (expense) 26 Income taxes 22 (179) (432) (414) 27 (2,318) (2,109) [1,969) Net profit before minority interests Minority interests Net profit, Group share Basic Group share of net earnings per share (EUR) Number of shares on which the calculation is based Diluted Group share of net earnings per share (EUR) Number of shares on which the calculation is based 5,616 4,363 4,001 12 17 [487] (382) (428) 5,129 3,981 3,573 28 28 10.21 7.92 7.11 502,412,694 502,911,125 502,395,491 28 28 10.18 504,010,291 7.89 504,640,459 7.08 504,894,946