Payless ShoeSource and Dillard's both offer men's formal footwear. Payless offers lower- to middle-priced footwear, whereas Dillard's

Question:

Payless ShoeSource and Dillard's both offer men's formal footwear. Payless offers lower- to middle-priced footwear, whereas Dillard's offers more specialized, higher-end footwear. The average price for a pair of shoes in Payless may be about $50, whereas the average price in Dillard's may be about $175. The types of shoes offered by Dillard's are not sold by many other stores. Suppose a Payless store and a Dillard's store report the following amounts for men's shoes in the same year (company names are disguised):
_________________________Company 1 Company 2
Net sales.............................$100,000................$100,000
Cost of goods sold....................40,000...................75,000
Gross profit..........................$ 60,000.................$ 25,000
Average inventory..................$ 25,000..................$ 10,000
Required:
1. For Company 1 and Company 2, calculate the .
2. For Company 1 and Company 2, calculate the gross profit ratio.
3. After comparing the s and gross profit ratios, which company do you think is Payless and which is Dillard's? Explain.
Inventory Turnover Ratio
Inventory Turnover RatioThe inventory turnover ratio is a ratio of cost of goods sold to its average inventory. It is measured in times with respect to the cost of goods sold in a year normally. Inventory Turnover Ratio FormulaWhere,...