Financial Accounting, Student Value Edition Plus MyLab Accounting with Pearson eText -- Access Card Package (12th Edition)
12th Edition
ISBN: 9780134833156
Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.
Publisher: PEARSON
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Textbook Question
Chapter 6, Problem 6.65AP
(Learning Objective 4: Compute and evaluate gross margin and inventory turnover) Crispy Donut, Inc., and Calhoun Coffee Corporation are both specialty food chains. The two companies reported these figures, in millions:
| A | B | C |
| Crispy Donut, Inc. Income Statements (Adapted) Years Ended December 31 |
||
| (Amounts in millions) | 2018 | 2017 |
| Revenues: | ||
| Net sales | $ 600 | $ 710 |
| Costs and Expenses: | ||
| Cost of goods sold | 540 | 602 |
| Selling, general, and administrative expenses | 64 | 53 |
| A | B | C |
| Crispy Donut, Inc. Balance Sheets (Adapted) December 31 |
||
| (Amounts in millions) | 2018 | 2017 |
| Assets | ||
| Current assets | ||
| Cash and cash equivalents | $ 13 | $ 29 |
| Receivables | 23 | 38 |
| Inventories | 15 | 25 |
| 8 |
Requirements
1. Compute the gross margin percentage and the rate of inventory turnover for Crispy Donut and Calhoun Coffee for 2018.
2. Based on the these statistics, which company looks more profitable? Why?
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Chapter 6 Solutions
Financial Accounting, Student Value Edition Plus MyLab Accounting with Pearson eText -- Access Card Package (12th Edition)
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