Question

A company reported the following in its 2024 financial statements:

2024
Sales $ 427,000
Cost of goods sold:
Inventory, January 1 63,000
Net purchases 337,000
Goods available for sale 400,000
Inventory, December 31 96,000
Cost of goods sold 304,000
Gross profit $ 123,000
The company's 2024 gross profit ratio is:

Note: Round your answer to the nearest whole percentage.

Answer 1

To calculate the company's 2024 gross profit ratio, we first need to find the gross profit and then divide it by the sales.

Gross Profit = Sales - Cost of Goods Sold

Gross Profit = $427,000 - $304,000

Gross Profit = $123,000

Gross Profit Ratio = (Gross Profit / Sales) * 100

Gross Profit Ratio = ($123,000 / $427,000) * 100

Gross Profit Ratio = 28.77%

Rounding to the nearest whole percentage, the company's 2024 gross profit ratio is approximately 29%.