Analyzing Gross Profit Percentage on the Basis of an Income Statement and Within-Industry Comparison
Wolverine World Wide Inc. prides itself as being the “world” s leading marketer of U.S. branded nonathletic footwear.” It competes in many markets with Deckers often offering products at lower price poi nt. Its brands include Wolverine, Bates, Sebago, and Hush Puppies, The following data were taken from its recent annual report (dollars in thousands):
Sales of merchandise | $ 1,220.568 |
Income taxes | 44 .763 |
Cash di vid ends declared on common stock | 21.500 |
Selling and administrative expense | 345 , 183 |
Cost of products sold | 734.547 |
Interest expense | 2.850 |
Other income | 839 |
Items not included in above amounts : |
|
Number of shares of common stock outstanding.48.88 8 |
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Required:
1. Based on these data , prepare an income statement (showing bot h gross profit and income from operation s). There were no extra or dinar y items.
2. How much was the gross profit margin? What was the gross profit percentage ratio? Explain what these two amounts mean. Compare the gross profit percentage with that of Deckers. What do you believe accounts for the difference?
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