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2. Calculate the gross margin percentage, expenses- to-sales ratio, net profit margin (after taxes), inven- tory turnover, asset turnover, and return on asset ratio for Tiffany and Walmart using the financial data in Exhibit 1
Expert Answer
The financial performance indicators are as given below:
| Item | Formula | Walmart | Tiffany |
| Gross Margin % | (Gross Margin/Net Sales) x 100 | (95,086/401,244) x 100
= 23.70% |
(1176/2709) x 100
= 43.41% |
| Expenses-to-sales ratio | (SG $ A Expenses)/Net Sales | (76,561/401,244)
= 0.1908 |
(1089/2709)
= 0.4020 |
| Net Profit Margin (after taxes) | Net income after taxes | $10,939 | $262 |
| Net Profit Margin % | (Net income after taxes/Net Sales) x 100 | 10,939/401,244
= 2.7263% |
(262/2,709) x 100
= 9.6714% |
| Inventory Turnover ratio | Cost of goods sold/Average inventory at cost | 306,158/34,511
= 8.87 |
1179/1427
= 0.83 |
| Asset Turnover ratio | Net Sales/Total Assets
Net Sales/(Total current + Fixed Assets) |
401,244/(48,949 + 114,480)
= 2.4452 |
2709/(2445 + 1041)
= 0.7771 |
| Return on Investment | Net profit Margin % x Asset Turnover ratio | 2.7263 x 2.4452
= 6.6934% |
9.6714 x 0.7771
= 7.5157% |
