FA 4-1 gross profit percent, average markup percent, and ratio of sales to asset

Question

FA 4-1 gross profit percent, average markup percent, and ratio of sales to assets CVS Caremark Corporation operates over 7,000 pharmacies and is a major competitor of Walgreen Co. The following data (in millions) were adapted from recent financial statements Obj | 8 of CVS. Year 2 Year 1 Net sales $107,100 $95,778 Cost of merchandise sold 86,539 75,559 Gross profit $ 20,561 $20,219 Average total assets $ 63,356 $61,905 1. Compute the gross profit percent for Years 1 and 2. Round to one decimal place. 2. Compute the average markup percent for Years 1 and 2. Round to one decimal place. 3. Compute the ratio of sales to assets for Years 1 and 2. Round to two decimal places. 4. Compare the results in parts (1), (2), and (3) for Years 1 and 2. Comment on your comparison.

Explanation / Answer

Year

2

1

net sales

107100

95778

cost of goods sold

86539

75559

0.808021

gross profit

20561

20219

average total assets

63356

61905

1-

Gross profit percentage = gross profit /net ales

19.20%

21.11%

2-

average markup percentage = gross margin/cost of goods sold

23.76%

0.267592

3-

ratio of sales to asset = net sales/average assets

169.04%

154.72%

Comparison

4-

Gross profit percentage = gross profit /net ales

19.20%

21.11%

it has decreased from the previous year ratio

average markup percentage = gross margin/cost of goods sold

23.76%

26.76%

average mark up ratio decreased from the previous year due to increased cost of goods sold

ratio of sales to asset = net sales/average assets

169.04%

154.72%

this ratio has increased over the period of time

Year

2

1

net sales

107100

95778

cost of goods sold

86539

75559

0.808021

gross profit

20561

20219

average total assets

63356

61905

1-

Gross profit percentage = gross profit /net ales

19.20%

21.11%

2-

average markup percentage = gross margin/cost of goods sold

23.76%

0.267592

3-

ratio of sales to asset = net sales/average assets

169.04%

154.72%

Comparison

4-

Gross profit percentage = gross profit /net ales

19.20%

21.11%

it has decreased from the previous year ratio

average markup percentage = gross margin/cost of goods sold

23.76%

26.76%

average mark up ratio decreased from the previous year due to increased cost of goods sold

ratio of sales to asset = net sales/average assets

169.04%

154.72%

this ratio has increased over the period of time

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