Research In Motion Apple ($ millions) Current Prior Current Prior Revenues (Net
ID: 2374310 • Letter: R
Question
Research In Motion
Apple
($ millions)
Current
Prior
Current
Prior
Revenues (Net sales)....
$14,953
$11,065
$42,905
$37,491
Cost of sales.................
8,369
5,968
25,683
24,294
1.Compute the dollar amount of gross margin and the gross margin ratio for the two years shown for each of these companies
2. Which company earns more in gross margin for each dollar of net sales? How do they compare to the industry average of 40.0%?
3. Did the gross margin ratio improve or decline for these companies?
please write formula! and progress. It should be accurate!! sir!
Research In Motion
Apple
($ millions)
Current
Prior
Current
Prior
Revenues (Net sales)....
$14,953
$11,065
$42,905
$37,491
Cost of sales.................
8,369
5,968
25,683
24,294
Explanation / Answer
Gross Margin = Sales - Cost of Good Sold
Gross Margin ratio = Gross Margin / Sale
For RIM,
current year gross margin = $14,953 - $8,369 = $6,584
current year gross margin ratio = $6,584/$14953 = 44.03%
proir year gross margin = $11,065 - $5,968 = $5,097
proir year gross margin ratio = $5,097/$11,065 = 46.06%
For Apple,
current year gross margin = $42,905 - $25,683 = $17,222
current year gross margin ratio = $17,222/$42,905 = 40.14%
proir year gross margin = $37,491 - $24,294 = $13,197
proir year gross margin ratio = $13,197/$37,491 = 35.20%
2. Comparing RIM with Apple, RIM has a better gross margin for every dollar of sale. RIM surpass industry average for both of the years. Apple achieved gross profit margin of 40.14% current year, which is approximately the same as the margin of industry average but failed to beat industry average in prior year.
3. Apple improved its gross profit margin from 35.20% to 40.14%. On the other hand, RIM performance declined from 46.06% to 44.03%.
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