Sprinkle Top and Coffee Shop are both specialty food chains. The two companies reported these figures, in millions:

Requirements
1. Compute the gross profit percentage and the rate of inventory turnover for Sprinkle Top and Coffee Shop for 2010.
2. Based on these statistics, which company looks more profitable? Why? What other expense category should we consider in evaluating these twocompanies?

Transcribed Image Text:

Sprinkle Top, Inc. Income Statement (Adapted) Years Ended December 31 Amounts in millions) 2010 2009 Revenues: Net sales $544 $707 Costs and Expenses: Cost of goods s Selling, general, and administrative expens 478 60 594 Sprinkle Top, Inc. Balance Sheet (Adapted) December 31 Amounts in millions) 2010 2009 Assets Current assets: Cash and cash equivalents...$12 Receivabl Inventories 28 26 $27 40 36 Coffee Shop Corporation Income Statement (Adapted) Years Ended December 31 (Amounts in millions) 2010 2009 Net sales Cost of goods s Selling, general, and administrative expenses $7,700 $6,300 3,160 2,604 2,390 2,950 Coffee Shop Corporation Balance Sheet (Adapted) December 31 (Amounts in millions) 2010 2009 Assets Current assets: Cash and temporary investments. Receivables, net Inventories $313 $%172 188 230 627 544