Asked by Rebekah Gonzalez on Jun 29, 2024
Verified
The following information is for Barrel and its competitor Crate.
Required:
1.Calculate the dollar amount of gross margin and the gross margin ratio to the nearest percent,for each company for both years.
2.Which company had the more favorable ratio for each year?
3.Which company had the more favorable change in the gross margin ratio over this 2-year period?
Gross Margin
The difference between revenue and cost of goods sold divided by revenue, expressed as a percentage, indicating the financial health and efficiency of a product or business.
Gross Margin Ratio
A profitability metric that measures the difference between sales and the cost of goods sold, expressed as a percentage of sales.
Favorable Ratio
A ratio that indicates a positive outcome, often related to financial performance, such as higher revenue or lower expenses compared to previous periods.
- Ascertain the gross earnings for an enterprise.
Verified Answer
3.Crate's gross margin ratio is increasing,while Barrel's is decreasing.Moreover,these changes appear significant and warrant further analysis.
Learning Objectives
- Ascertain the gross earnings for an enterprise.
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