Zhou Inc. operates a retail operation that purchases and sells snowmobiles, among other outdoor products. The company purchases all inventory on credit and uses a periodic inventory system. The Accounts Payable account is used for recording inventory purchases only; all other current liabilities are accrued in separate accounts. You are provided with the following selected information for the fi scal years 2015 through 2018, inclusive.

2015 2016 2017 2018 Income Statement Data Sales revenue $96,890 $

(e) $82,220 Cost of goods sold

(a) 28,060 26,490 Gross profi t 67,800 59,620 (i)
Operating expenses 63,640

(f) 52,870 Net income $

(b) $ 3,510 $ (j)
Balance Sheet Data Inventory $13,000 $

(c) $14,700 $ (k)
Accounts payable 5,800 6,500 4,600 (l)
Additional Information Purchases of inventory on account $25,890 $ (g) $24,050 Cash payments to suppliers

(d) (h) 24,650 Instructions

(a) Calculate the missing amounts.

(b) The vice presidents of sales, marketing, production, and fi nance are discussing the company’s results with the CEO. They note that sales declined over the 3-year fi scal period, 2016−2018. Does that mean that profi tability necessarily also declined?
Explain, computing the gross profi t rate and the profi t margin for each fi scal year to help support your answer.
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