Link Back to Chapter 5 (Gross Profit Percentage and Inventory Turnover). Obtain the annual reports of as many companies as you have team members—one company per team member. Most companies post their financial statements on their Web sites.
1. Identify the inventory method used by each company.
2. Compute each company’s gross profit percentage and rate of inventory turnover for the most recent two years.
3. For the industries of the companies you are analyzing, obtain the industry averages for gross profit percentage and inventory turnover from Robert Morris Associates, Annual Statement Studies; Dun and Bradstreet, Industry Norms and Key Business Ratios; or Leo Troy, Almanac of Business and Industrial Financial Ratios.
4. How well does each of your companies compare to the average for its industry? What insight about your companies can you glean from these ratios?