You have recently been hired as the Controller for a large publicly-traded company that has experienced significant operating losses for the past few years, which has caused a sharp decline in the companys stock price. The CFO has asked you to prepare a memo (about 1 page) to discuss the following topic:

• Currently, management focuses solely on gross profit in dollars rather than the gross profit margin percentage. Which is the more useful metric and what factors most influence gross profit margin? Name two specific ways to improve the gross profit margin.