The gross profit percentage for Fran's Clothing Retailer was 37.7% for the year ended December 31, 2018 and 42.5% for the year ended December 31, 2019. The industry average gross profit percentage, for both years, is 45.7%. Briefly discuss these findings.
What will be an ideal response?
Answer: The gross profit percentage for Fran's Clothing Retailer has improved from 37.7 percent for 2018 to 42.5 percent for 2019. This shows that the gross profit earned from merchandise inventory has increased and is providing more to cover the remaining operating expenses and provide for net income. This increase is a good step in reaching the industry average. Fran's Clothing Retailer should work to continue this increase and to keep operating expenses under control. These two actions will improve net income.
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