Gildan Activewear Inc. is a Montreal-based company that manufactures and sells activewear, socks, and underwear. The company’s brands include Gildan, Gold Toe, and Anvil. The company also manufactures products through licensing arrangements with Under Armour and New Balance brands. Exhibit 4.14 presents the company’s consolidated statements of earnings and comprehensive income for the years ended January 3, 2021, and December 29, 2019.

Required 

a. Gildan reports “net sales” on its consolidated statements of earnings. Explain what this means. 

b. Calculate the amount of Gildan’s gross profit percentage for 2020 and 2019. Has it improved? 

c. Using the financial statements in Appendix A, calculate Dollarama’s gross profit percentages for the same periods. How do they compare with Gildan’s percentages? 

d. Does Gildan prepare its consolidated statements of earnings using a single-step or a multi-step approach? 

e. Does Gildan present its expenses by function or by nature? Does this approach require a higher level of management judgement when preparing the statement?

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GILDAN ACTIVEWEAR INC. Consolidated Statements of Earnings and Comprehensive Income Fiscal years ended January 3, 2021, and December 29, 2019 (in thousands of U.S. dollars, except per share data) Net sales (note 25) Cost of sales (note 16(c)) Gross profit Selling, general and administrative expenses (note 16(a)) Impairment of trade accounts receivable (note 6) Restructuring and acquisition-related costs (note 17) Impairment of goodwill and intangible assets Operating income (loss) Financial expenses, net (note 14(c)) Earnings (loss) before income taxes Income tax recovery (note 18) Net earnings (loss) Other comprehensive income (loss), net of related income taxes: Cash flow hedges (note 14(d)) Actuarial gain (loss) on employee benefit obligations (note 12(a)) Comprehensive income (loss) 2020 $1,981,276 1,732,217 249,059 272,306 15,453 48,154 93,989 (180,843) 48,530 (229,373) (4,091) (225,282) (8,503) 12,142 3,639 $ (221,643) 2019 $2,823,901 2,119,440 704,461 340,487 27,652 47,329 288,993 39,168 249,825 (9,984) 259,809 (3,917) (1,296) (5,213) $ 254,596