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L04 PS-SB. u 1 J Protability Analysis Ashley Enterprises reports the following information on its income statement: Net sales . $300,000...

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Compute Ashley's gross profit percentage and return on sales ratio. Explain what each ratio tells us

about Ashley's performance. Ashley is planning to add a new product and expects net sales to be $32,000

and cost of goods to be $26,000. No other income or expenses are expected to change. How will this

affect Ashley's gross profit percentage and return on sales ratio? What do you advise regarding the

new product offering?

L04 PS-SB. u 1 J Profitability Analysis Ashley Enterprises reports the following information on its income statement: Net sales ....................... $300,000 Administrative expenses ........... $20,000 Cost of goods sold ............... 170,000 Other income .................... 15,000 Selling expenses ................ 50,000 Other expense ................... 10,000
Required Compute Ashley’s gross profit percentage and return on sales ratio. Explain what each ratio tells us
aboutAshley’s performance. Ashley is planning to add a new product and expects net sales to be $32,000
and cost of goods to be $26,000. No other income or expenses are expected to change. How will this
affect Ashley’s gross profit percentage and retum on sales ratio? What do you advise regarding the
new product offering?

Top Answer

the gross profit intitally is of 43.33% which is good to bear the later operating expenses on the firm. On the... View the full answer

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