Calculating Gross Profit Margin and Inventory Turnover

The following table presents sales revenue, cost of goods sold, and inventory amounts for three

retailers of ne jewelry,

Tiffany & Co., Zale Corporation, and Blue Nile, Inc. (an Internet retailer).

($ millions)20132012

Tiffany & Co.

Revenues...............................2013:$4,031 2012:$3,794

Cost of goods sold .......................2013: 1,691 2012:1,631

Inventory ............................... 2013:2,327 2012: 2,234

Zale Corporation

Revenues...............................2013:$1,888 2012:$1,867

Cost of goods sold ....................... 2013:904 2012:906

Inventory ............................... 2013:768 2012:742

Blue Nile, Inc.

Revenues..............................2013:.$ 450 2012:$ 400

Cost of goods sold ....................... 2013:366 2012:325

Inventory ............................... 2013:35 2012:33

a. Compute the gross prot margin (GPM) for each of these companies for 2013 and 2012.

b. Compute the inventory turnover ratio and the average inventory days outstanding for 2013 for

each company.

c. What factors might determine the differences among these three companies ratios?

d. Zale reports that as of July 31, 2013 its LIFO reserve totaled $63 million while at July 31, 2012

it totaled $58.3 million. Using a 35% tax rate, how much money did Zale save in scal 2013

using LIFO and how much has Zale saved since it began using LIFO to value its inventories?