Dollar General Corporation operates general merchandise stores that feature quality merchandise at low prices to meet the needs of middle-, low-, and fixed-income families in southern, eastern, and midwestern states. For the year ended January 31, 2014, the company reported averageinventories of $2,475 (in millions) and an inventory turnover of 4.89. Average total fixed assetswere $2,080 (million) and the fixed asset turnover ratio was 8.14.Required:1. Calculate Dollar General’s gross profit percentage (expressed as a percentage with one decimalplace). What does this imply about the amount of gross profit made from each dollar of sales?TIP: Work backward from the fixed asset turnover and inventory turnover ratios to compute theamounts needed for the gross profit percentage.2. Is this an improvement from the gross profit percentage of 31.7 percent earned during theprevious year?
Dollar General Corporation operates general merchandise stores that feature quality merchandise at low prices to meet the needs of middle-, low-, and fixed-income families in southern, eastern, and midwestern states. For the year ended January 31, 2014, the company reported average
inventories of $2,475 (in millions) and an inventory turnover of 4.89. Average total fixed assets
were $2,080 (million) and the fixed asset turnover ratio was 8.14.
Required:
1. Calculate Dollar General’s gross profit percentage (expressed as a percentage with one decimal
place). What does this imply about the amount of gross profit made from each dollar of sales?
TIP: Work backward from the fixed asset turnover and inventory turnover ratios to compute the
amounts needed for the gross profit percentage.
2. Is this an improvement from the gross profit percentage of 31.7 percent earned during the
previous year?
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