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# Gross Profit Ratio, Inventory Turnover Ratio and Average Days

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** Please see the attached file for the complete problem description **

The table below contains selected financial information included in the 2009 financial statements of Saks, Inc.., and Dillard's, Inc., two companies in the department store industry.

(\$ in Millions) Saks Dillards
2009 2008 2009 2008 Balance sheet:
Inventories \$ 729 \$857 \$1,374 \$1,779

Income statement
Net sales \$3,030 \$6,831
Cost of goods sold 2,062 4,828
Calculate the 2009 gross profit ratio, inventory turnover ratio, and average days in inventory for both companies. Evaluate management of each company's investments. Industry averages for these ratios are as follows:
Gross Profit 25%
Inventory turnover 2.73
Average days in inventory 134

#### Solution Preview

Dear student,

saks dilliards
gross profit= (gross profit/sales)*100 31.9 29.3
saks dilliards
net sales 3030 6831
less: cost of goods sold 2062 4828
gross profit 968 2003

...

#### Solution Summary

This solution explains how to calculate the gross profit ratio, inventory turnover ratio, and average days in inventory for the two given companies.

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