Compute ashley gross profit percentage

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Reference no: EM131928250

Problem - Profitability Analysis

Ashley Enterprises reports the following information on its income statement:

Net sales - $300,000

Administrative expenses - $20,000

Cost of goods sold - 170,000

Other income - 15,000

Selling expenses - 50,000

Other expense - 10,000

Required - Compute Ashley's gross profit percentage and return on sales ratio. Explain what each ratio tells us about Ashley's performance. Ashley is planning to add a new product and expects net sales to be $32,000 and cost of goods to be $26,000. No other income or expenses are expected to change. How will this affect Ashley's gross profit percentage and return on sales ratio? What do you advise regarding the new product offering?

Reference no: EM131928250

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