Question

(62) Compute the gross profit rate and the profit margin for each fiscal year. (Round answers to 1 decimal place, e.g. 15.5%) 2021 2022 2023 Gross profit rate Profit margin

Skysong, Inc. operates a retail operation that purchases and sells snowmobiles, among other outdoor products. The company purchases all inventory on credit and uses a periodic inventory system. The Accounts Payable account is used for recording inventory purchases only; all other current liabilities are accrued in separate accounts. You are provided with the following selected information for the fiscal years 2020 through 2023, inclusive.

Answer 1

Answer:

Gross Profit rate = Gross Profit / Sales Revenue

2021 = 76650 / 105000 = 73% ; 2022 = 55760 / 82000 = 68% ; 2023 = 50820 / 77000 = 66%

Profit Margin = Net Income / Sales Revenue

2021 = 7350 / 105000 = 7% ; 2022 = 3280 / 82000 = 4% ; 2023 = 1540 / 77000 = 2%