Question

Swank Clothiers had sales of $458,000 and cost of goods sold of $321,000. a. What is...

Swank Clothiers had sales of $458,000 and cost of goods sold of $321,000.

a. What is the gross profit margin (ratio of gross profit to sales)? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
  



b. If the average firm in the clothing industry had a gross profit of 40 percent, how is the firm doing?

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Answer #1

Answer to Part a.

Gross profit = Sales - Cost of Goods Sold = $ 458,000 - $ 321,000 = $ 137,000

Gross Profit Margin = Gross Profit / Sales

Gross Profit Margin = $137000 / $ 458000

Gross Profit Margin = 29.91%

Answer to Part b.

Swank Clothiers has a Gross Profit Margin is 29.91%, If the average firm in the clothing industry had a gross profit of 40 per cent. Then Swank Clothiers is not doing goods as its profit margin is less than Industry Average is not good as compared with Industry.

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