Chapter 06 - Reporting and Interpreting Sales Revenue, Receivables, and Cash
WOLVERINE WORLD WIDE INC.
For the Year Ended
(dollars in thousands)
Sales of merchandise
Cost of products sold
Selling and administrative expense
Income from operations
Other income (expense)
Earnings per share ($94,064 ÷ 48,888 shares)
Gross profit margin: $1,220,568 – $734,547 = $486,021
Gross profit percentage ratio: $486,021 ÷ $1,220,568 = .398
Gross margin or gross profit in dollars is the difference between the sales prices and the
costs of purchasing or manufacturing all goods that were sold during the period
(sometimes called the markup); that is, net revenue minus only one of the expenses--
cost of goods sold. The gross profit ratio is the amount of each net sales dollar that was
gross profit during the period. For this company, the rate was 39.8%, which means that
$.398 of each net sales dollar was gross profit (alternatively, 39.8% of each sales dollar
was gross profit for the period).
Wolverine World Wide's gross profit percentage was below Deckers’s current (2008)
percentage of 44.3%.
Deckers’s shoes have a reputation as a rugged product as well
as a premium "high fashion" product.
This has allowed it to maintain higher prices and
higher gross margins.
In marketing this is called the value of brand equity.