Answered! 2. Calculate the gross margin percentage, expenses- to-sales ratio, net profit margin (after taxes), inven- tory…

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
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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

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= 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%

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