Question

Calculating Gross Profit Margin and Inventory Turnover The following table presents sales revenue, cost of goods sold, and inventory amounts for three retailers of fine jewelry, Tiffany & Co., Zale Corporation, and Blue Nile, Inc. (an Internet retailer). 2013 2012 $4,031 53,794 1,091 1,631 2.327 2.234 (5 millions) Tiffany & Co. Revenues cost of goods sold Inventory Zale Corporation Revenues Cost of goods sold Inventory Blue Nile, Inc. Revenues cost of goods sold Inventory 51.888 $1.867 904 906 768 742 $450 366 $400 325

Answer 1

Answer with working note is given below

Gross profit is shown to 2 decimal points since nothing is specified in question

Sales Cost of Goods sold Gross profit Gross profit margin (GPM) Tiffany 2013 2012 $4,031 $3,794 $1,691 $1,631 $2,340 $2,163 58.05% 57.01% Zale 2013 $1,888 $904 $984 52.12% 2012 $1,867 $906 $961 51.47% $ Millions Blue Nile 2013 2012 $450 $400 $366 $325 $84 $75 18.67%) 18.75% (Gross profit/Sales)% b) Inventory Turnover Avg inventory days outstanding Tiffany 0.7 492 Zale Blue Nile 1.2 10.8 305 34 Working notes Opening inventory Closing inventory Average inventory Tiffany $2,234.01 $2,327.00 $2,280.5 Zale Blue Nile $742.0 $33.0 A $768.0 $35.0 B $755.00 $34.0 (A+B)/2 Inventory turnover (A/B) Cost of Goods sold-A Average inventory - B 0.74 $1,691.0 $2,280.51 1.20 $904.01 $755.0 10.76 $366.0 $34.0 Avg inventory days outstanding (A/B) 365 days - A Inventory turnover - B 492.24 365 0.7 304.84 365 1.2 33.91| 365 10.8 Amount saved in taxes to date Amount saved in taxes for year ending 7/31/2013 Million $22.1 $63*35% $1.6 ($63-$58.3)*35%

Sales Cost of Goods sold Gross profit Gross profit margin (GPM) Tiffany 2013 2012 $4,031 $3,794 $1,691 $1,631 $2,340 $2,163 58% 57% Zale 2013 $1,888 $904 $984 52% 2012 $1,867 $906 $961 51% $ Millions Blue Nile 2013 2012 $450 $400 $366 $325 $84 $75 19% 19%(Gross profit/Sales)% | b) Inventory Turnover Avg inventory days outstanding Tiffany 0.7 492 Zale Blue Nile 1.2 10.8 305 34 Working notes Opening inventory Closing inventory Average inventory Tiffany $2,234.01 $2,327.00 $2,280.5 Zale $742.0 $768.0 $755.0 Blue Nile $33.0 A $35.0 B $34.0 (A+B)/2 Inventory turnover (A/B) Cost of Goods sold-A Average inventory - B 0.7 $1,691.0 $2,280.5 1. 2 $904.01 $755.00 10.8 $366.0 $34.0 Avg inventory days outstanding (A/B) 365 days - A Inventory turnover - B 1 492 365 0 .7 305 34 365 365 1. 210.8 Amount saved in taxes to date Amount saved in taxes for year ending 7/31/2013 Million $22.1 $63*35% $1.6 ($63-$58.3)*35%