Trans Canada Motors Ltd. and X Country Trucks Inc. are competitors. The companies reported the following amounts,

Question:

Trans Canada Motors Ltd. and X Country Trucks Inc. are competitors. The companies reported the following amounts, in millions. In January 2014, you wish to make an investment in one of these companies. Results for 2013 are not yet available.

Requirements
1. Compute both companies' gross profit percentage and their rates of inventory turnover during 2012 and 2011.
2. Can you tell from these statistics which company should be more profitable in percentage terms? Why? What other important category of expenses do the gross profit percentage and the inventory turnover ratio fail to consider?

Inventory Turnover Ratio
Inventory Turnover RatioThe inventory turnover ratio is a ratio of cost of goods sold to its average inventory. It is measured in times with respect to the cost of goods sold in a year normally. Inventory Turnover Ratio FormulaWhere,...