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Calculate American Eagle’s gross profit ratio for each of the three years________.

User Lennon
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Final answer:

The question is incorrectly directed towards the calculation of gross profit ratio, but provided data pertains to economic profit. Without American Eagle's specific sales and cost data, gross profit ratio cannot be determined from the given information. Economic profit is discussed using the details available.

Step-by-step explanation:

The student has requested assistance in calculating American Eagle's gross profit ratio for three different years. However, the information provided relates to accounting and economic profit calculations rather than the gross profit ratio. To calculate the gross profit ratio, you would typically take the company's gross profit (sales revenue minus cost of goods sold) and divide it by the total sales revenue. This gives you a percentage that represents the gross profit margin. Unfortunately, without specific data on American Eagle's sales revenue and cost of goods sold, it is not possible to calculate this ratio. Nonetheless, from the provided information, we can discuss the concept of economic profit, which is the total revenues minus both explicit and implicit costs. In the examples provided, the economic profit was found to be negative $10,000 per year, and in the second case, it was $20,000 after subtracting the implicit cost of $30,000 from an accounting profit of $50,000.

User Maerlyn
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