Question
The following income statements were drawn from the annual reports of the Denver Company and the Reno Company: Denver* Reno* Net sales $ 36,000 $
| The following income statements were drawn from the annual reports of the Denver Company and the Reno Company: |
| Denver* | Reno* | |||||
| Net sales | $ | 36,000 | $ | 86,700 | ||
| Cost of goods sold | (17,920 | ) | (62,900 | ) | ||
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| Gross margin | 18,080 | 23,800 | ||||
| Less: Operating exp. | ||||||
| Selling and admin. exp. | (11,100 | ) | (16,096 | ) | ||
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| Net income | $ | 6,980 | $ | 7,704 | ||
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| *All figures are reported in thousands of dollars. |
| Required |
| a-1. | Compute the gross margin percentages and return-on-sales ratios of Denver and Reno. (Round your answers to the nearest whole number.) |
| a-2. | Ascertain which of the company is a high-end retailer based on ratios computed. | ||||
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| b. | If Denver and Reno have equity of $17,200 and $21,400, respectively, which company is in the more profitable business? | ||||
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Accounting for Governmental and Nonprofit Entities
Authors: Earl R. Wilson, Jacqueline L Reck, Susan C Kattelus
15th Edition
978-0256168723, 77388720, 256168725, 9780077388720, 978-007337960
