Question

Anthony Thomas Candies (ATC) reported the following financial data for 2016 and 2015: 2016 2015 Sales $305,000 $284,000 Sales returns and allowances 9,000 6,000 Net sales $296,000 $278,000 Cost of goods sold: Inventory, January 1 43,000 36,000 Net purchases 152,000 146,000 Goods available for sale 195,000 182,000 Inventory, December 31 57,000 43,000 Cost of goods sold 138,000 139,000 Gross profit $158,000 $139,000 ATC's gross profit ratio (rounded) in 2016 is: 53.4%. 50.3%. 51.9%. None of these is correct.

Answer 1

53.4%

Step-by-step explanation:

Gross profit ratio is a profitability ratio that shows the relationship between gross profit and total net sales revenue.

Gross profit ratio = Gross profit/ Net sales = $158,000/ $296,000 = 0.534 = 53.4%