2 Evaluating Financial Information 13- Liquidators, Inc., competes with Lowe\'s

Question

2 Evaluating Financial Information 13- Liquidators, Inc., competes with Lowe's in product lines such as hardwood flooring, mold- and noise-reducing underlay. The two companies reported the following financial results in Lumber fiscal 2013: Lumber Liquidators 41.1% 77% 28.5% $ 2.77 Lowe's Gross profit percentage Net profit margin Return on equity Earnings per share 34.6% 4.3% 17.8% $ 2.18 Required: l. Calculate the difference in gross profit percentage between Lumber Liquidators and Lowe's. Calculate the difference in net profit margin between Lumber Liquidators and Lowe's. using your answers to requirements 1 and 2, identify the company that best controls operating expenses other than cost of goods sold.

Explanation / Answer

1.Difference in Goss Profit margin between Lumber & Lowe's = 41.1% - 34.6% = 4.5%

2.Difference in net profit margin between Lumber & Lowe's =7.7% - 4.3%

3. Lumber Liquidator has a better performamce for Operating expenses since it has a higher gross profit margin.

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