Question

Calculate gross profit ratio and cost of goods sold Refer to the consolidated statements of earnings in the Campbell Soup Company annual report in the appendix.
Required:
a. Calculate the gross profit ratio for each of the past three years.
b. Assume that Campbell's net sales for the first four months of 2015 totaled 527 billion. Calculate an estimated cost of goods sold and gross profit for the four months.

Answer 1

Answer:

gross profit ratio = (total revenue - cost of goods sold) / total revenue

I looked for the missing information:

year                    total sales                   cost of goods sold

2012                    $7,175                            $4,365

2013                    $8,052                           $5,140

2014                    $8,268                           $5,370

   

a)

gross profit ratio:

2012 = ($7,175 - $4,365) / $7,175 = 39.16%

2013 = ($8,052 - $5,140) / $8,052 = 36.16%

2014 = ($8,268 - $5,370) / $8,268 = 35.05%

b)

since the gross profit margin ratio is decreasing every year, we can assume that it will keep decreasing in 2015. Using linear regression, the slope is -0.02055. So the estimated gross profit margin ratio for 2015 = 34.33%

estimated cogs (first four months of 2015) = $527 billion x (1 - 34.33%) = $346.08 billion

estimated gross profit (first four months of 2015) = $527 billion x 34.33% = $180.92 billion