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Business
Accounting
Carrler Lennox Trane York Sales $150,000 $550,000 $38,700 $255,700 Sales discounts 5,000 17,500 600 4,800 Sales returns and allowances 20,000 6,000 5,100 900 Cost of goods sold 79,750 329,589 24,453 126,500

Carrler Lennox Trane York Sales $150,000 $550,000 $38,700 $255,700 Sales discounts 5,000 17,500 600 4,800 Sales returns and allowances 20,000 6,000 5,100 900 Cost of goods sold 79,750 329,589 24,453 126,500

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The initial analysis should include the following:

  • The ratio equation
  • The calculation of the ratio using the equation and the pre-assigned Quick Study or Exercise from the textbook. (See below)
  • Use the result in a sentence; i.e. For every dollar invested in assets the company is earning 22.4 cents or 22.4% in net income. 
  • Then explain whether this is a good result or a result that needs improving.
  • Use citations to cite any outside sources used.
  • The original post should include at least three (3) sentences but no more than seven (7) sentences.

SHOW WORK

**QS 5-15 Computing and Analyzing Gross Margin Ratio** Compute net sales, gross profit, and the gross margin ratio for each of the four separate companies. Interpret the gross margin ratio for Carrier. | | Carrier | Lennox | Trane | York | |----------------|----------|---------|--------|---------| | Sales | $150,000 | $550,000| $38,700| $255,700| | Sales discounts| 5,000 | 17,500 | 600 | 4,800 | | Sales returns and allowances | 20,000 | 6,000 | 5,100 | 900 | | Cost of goods sold | 79,750 | 329,589 | 24,453 | 126,500 | In this table: - **Sales** represent the total revenue generated from sales. - **Sales discounts** are reductions in price given to customers. - **Sales returns and allowances** account for returned or defective items. - **Cost of goods sold** (COGS) is the direct cost of producing or purchasing the products sold. To find the net sales, gross profit, and gross margin ratio: 1. **Net Sales** = Sales - Sales Discounts - Sales Returns and Allowances 2. **Gross Profit** = Net Sales - Cost of Goods Sold 3. **Gross Margin Ratio** = (Gross Profit / Net Sales) x 100 For interpretation, apply these calculations specifically to Carrier and analyze how efficiently it converts sales into profit, compared to other companies.
Transcribed Image Text:**QS 5-15 Computing and Analyzing Gross Margin Ratio** Compute net sales, gross profit, and the gross margin ratio for each of the four separate companies. Interpret the gross margin ratio for Carrier. | | Carrier | Lennox | Trane | York | |----------------|----------|---------|--------|---------| | Sales | $150,000 | $550,000| $38,700| $255,700| | Sales discounts| 5,000 | 17,500 | 600 | 4,800 | | Sales returns and allowances | 20,000 | 6,000 | 5,100 | 900 | | Cost of goods sold | 79,750 | 329,589 | 24,453 | 126,500 | In this table: - **Sales** represent the total revenue generated from sales. - **Sales discounts** are reductions in price given to customers. - **Sales returns and allowances** account for returned or defective items. - **Cost of goods sold** (COGS) is the direct cost of producing or purchasing the products sold. To find the net sales, gross profit, and gross margin ratio: 1. **Net Sales** = Sales - Sales Discounts - Sales Returns and Allowances 2. **Gross Profit** = Net Sales - Cost of Goods Sold 3. **Gross Margin Ratio** = (Gross Profit / Net Sales) x 100 For interpretation, apply these calculations specifically to Carrier and analyze how efficiently it converts sales into profit, compared to other companies.
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