Financial Reporting and Analysis【Reading 20】Sample
A firm’s financial statements reflect the following information:
Beginning inventory |
$3,200,000 |
Purchase during the year |
$1,700,000 |
Ending inventory |
$2,100,000 |
Sales |
$4,800,000 |
Gross profit margin | ???? |
What was the firm’s gross profit margin?
First we can determine the COGS by: COGS = beginning inventory + purchases – ending inventory = $2,800,000.
Then, gross profit margin = (sales – COGS) / sales = 0.42. |