Gross Profit Percentage The following financial data is from Hi-Tech Instruments

Question

Gross Profit Percentage
The following financial data is from Hi-Tech Instruments' financial statements (thousands of dollars, except earnings per share.)

(Thousands of Dollars)

Calculate the company's gross profit percentage for 2016.

Round answer to one decimal place. (Ex.: 0.2345 = 23.5%)

Answer%

Compare the result to the industry average.

Hi-Tech Instruments' ratio is higher than the industry average.

Hi-Tech Instruments' ratio is lower than the industry average.

2016 Sales revenue $209,500 Cost of goods sold 125,500 Net income 8,300 Dividends 2,600 Earnings per share 4.15

Explanation / Answer

Calculation of Gross Profit Percentage of Hi-Tech Instruments for the year 2016

Gross Profit                  = Sales – Cost of Goods sold

                             = $ 2,09,500 - $ 1,25,500

                             = $ 84,000

Gross Profit Percentage = [ $ 84,000 / $ 2,09,500 ] * 100

                                       = 40.10 %

Comparison of Gross Profit Percentage to the industry average

Hi-Tech Instruments GP Ratio = 40.10%

Industry Average GP Ratio     = 42.80%

Conclusion : Hi-Tech Instruments' ratio is lower than the industry average.

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