Solution-Calculate the gross margin percent

Calculate the gross margin percent

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Question - Inventory Management Metrics

Large retailers like The Home Depot and Wal-Mart typically use gross margin ratio (gross margin + sales), inventory turnover (sometimes referred to as inventory turns), and gross margin return on investment (GMROI) to evaluate how well inventory has been managed. The goal is to maximize profits while minimizing the investment in inventory. Below are data for four scenarios, a base scenario (# 1) followed by three modifications (#s 2, 3, & 4) to the base scenario.

	Scenario 1	Scenario 2	Scenario 3	Scenario 4
Sales	$10,000	$20,000	$13,000	$10,000
Cost of goods sold	8,000	16,000	8,000	$8,000
Gross profit	$2,000	$4,000	$5,000	$2,000
Average inventory	$7,000	$7,000	$7,000	$6,000

For each scenario calculate the gross margin percent, the inventory turnover, and GMROI. Round your answers to one decimal place.

Reference no: EM131769238

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Calculate the gross margin percent

Reference no: EM131769238

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