Question

Analyzing Inventory for Two Retail Grocery Companies Carrefour Group (headquartered in Boulogne-Billancourt, France) and Tesco PLC (headquartered in Welwyn Garden City, UK) compete head-to-head in the grocery space in the UK, Ireland, Central Europe, and North Africa. The following information comes from their 2018 annual reports. Carrefour Group in Tesco PLC in € millions £ millions 2018 2017 2018 2017 Sales € 79,800 € 82,231 £60,366 £58,713 Cost of sales 60,850 62,311 54,141 53,015 Gross profit 18,950 19,920 6,225 5,698 Inventory 6,442 7,025 2,376 2,416 Total assets 47,378 47,813 44,862 45,853 Required a. Calculate gross profit margin for each year for both companies. Note: Round percentage to one decimal place (for example, enter 6.7% for 6.6555%). Carrefour Group Tesco PLC 2018 2017 2018 2017 Gross profit margin (%) 0% X 0 % X 0 % X 0 % x b. Determine the common-size inventory for each year for both companies. Note: Round percentage to one decimal place (for example, enter 6.7% for 6.6555%). Carrefour Group Tesco PLC 2018 2017 2018 2017 Common-size inventory 0% X 0% X 0% X 0% X
please I need them. thank you

Answer 1

a. Calculation of gross profit margin:
	Carrefour Group	Tescco PLC
	2018	2017	2018	2017
Gross profit margin (%) =	( Gross profit / Sales) * 100	( Gross profit / Sales) * 100	( Gross profit / Sales) * 100	( Gross profit / Sales) * 100
Gross profit margin (%) =	( £18,950 / £79,800 ) * 100	( £19,920 / £82,231 ) * 100	( £6,225/ £60,366) * 100	( £5,698 / £58,713 ) * 100
Gross profit margin (%) =	23.75%	24.22%	10.31%	9.70%
b. Calculation of Common size invetory:
	Carrefour Group	Tescco PLC
	2018	2017	2018	2017
Common-size inventory	( Inventory / Total assets) * 100	( Inventory / Total assets) * 100	( Inventory / Total assets) * 100	( Inventory / Total assets) * 100
Common-size inventory	( £6,442 / £47,378 ) * 100	( £7,025 / £47,813 ) * 100	( £2,376/ £44,862) * 100	( £2,416 / £45,853 ) * 100
Common-size inventory	13.60%	14.69%	5.30%	5.27%
c. Calculation of inventory turnover and days average inventory outstanding for 2018
	Carrefour Group	Tescco PLC
Inventory Turnover	( Cost of sales / Average inventory )	times	( Cost of sales / Average inventory )	times
Inventory Turnover	( £60,850 / £6,733.5)	times	( £54,141/ £2,396) * 100	times
Inventory Turnover	9.0	times	22.6	times
Average inventory days	( Average Inventory / Cost of goods sold ) * 365	days	( Average Inventory / Cost of goods sold ) * 365	days
Average inventory days	( £6,733.5/£60,850 ) * 365	days	( £2,396/£54,141 ) * 365	days
Average inventory days	40.4	days	16.2	days
Working note:
Average Invemtory for Carrefour Group 2018:
Average inventory = ( Beginning Inventory + Ending Inventory ) / 2
= ( £ 7,025 + £ 6,442 ) / 2
= £ 6733.5
Average Invemtory for Tescco PLC 2018:
Average inventory = ( Beginning Inventory + Ending Inventory ) / 2
= ( £ 2,416 + £ 2,376 ) / 2
= £ 2,396