Gross profit line and income before taxes line

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Reference no: EM13137922

For the year ending Dec 08 Adidas Gross margin was 48.7% while for the year ended May 09 Nike’s was 44.9%, meaning that Adidas was more efficient at producing its product. But in that same year Nike’s “Income Before Taxes” margin was 10.2% while Adidas’ was only 8.4%, meaning that Nike was more efficient in running its total operations. Based on the data in the income statement, what is the primary reason that Adidas' Gross Profit margin was higher than Nike's, but it’s Income Before Taxes margin was lower? In other words, what happened between the gross profit line and the income before taxes line to cause this flip in which company was more profitable/efficient?

Reference no: EM13137922

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