J.C. Penney had net sales of $24,750 million, cost of goods sold of $16,150 million and net income of $837 million. Its gross margin ratio equals 3.4%.
($24,750 - $16,150)/$24,750 = 34.7%

Question

Quizplus · Accepted Answer

The given calculation for gross margin ratio is incorrect. The correct formula for gross margin ratio is (Revenue - Cost of goods sold) / Revenue. Using the given values, the gross margin ratio should be:

($24,750 - $16,150) / $24,750 = 34.5%

Therefore, the statement that the gross margin ratio equals 3.4% is false.

JC Penney Had Net Sales of $24,750 Million, Cost of Goods