Posted: July 19th, 2016

Which company appears to be performing better?

FOR THE YEARS ENDED DECEMBER 31
Year 1 Year 2 Year 3
Sales C C C
Expenses:
Depreciation C F F
Salaries and wages F F F
Advertising F F F
Rent and utilities F F F
Total expenses
C C C
Net income (loss) C C C

2. Rationale

T
PROBLEM 5-2: CALCULATION OF GROSS PROFIT RATIO FOR WAL-MART AND TARGET

The following information was summarized from the consolidated
statements of income of Wal-Mart Stores, Inc. and Subsidiaries for
the years ended January 31, 2011 and 2010, and the consolidated
statements of operations of Target Corporation for the years ended
January 29, 2011, and January 30, 2010. (For each company, years
FY2010 FY2009
(in Millions) Sales* Cost of Sales Sales* Cost of Sales
Wal-Mart $418,952 $315,287 $405,132 $304,444
65,786 45,725 63,435 44,062
Target
* Described as net sales by Wal-Mart.

Required:
1. Calculate the gross profit ratios for Wal-Mart and Target for 2010 and 2009.
2. Which company appears to be performing better? What factors
might cause the difference in the gross profit ratios of the two
companies? What other information should you consider to
determine how these companies are performing in this regard?

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