Question

The following information is available for MVF Company(dollar amounts are in millions)

Answer 1

Answer:

                                           2016            2015          2014           2013

gross profit%                     26.29%        22.58%      22.45%     22.41%

Inventory turnover          6.58               7.64            7.6             7.94

cost of material %          59.89%       51.76%         89.82%       51.10

b. gross%  has increased this may be due to a high demand, and intense marketing.

inventory turnover has decreased this may be due to new competition, or introduced product(new product)

cost of material purchased % it has increased in 2016, this may be due to increased production and effective use of material.

Explanation:

gross profit % =gross profit/ sales

gross profit = sales less cost of sales

inventory turnover = cost of sales / average inventory

average inventory = (opening inventory + closing inventory )/2

cost of material purchased/ cost of finished goods

finished goods = cost of sales + closing - opening goods