Question

BTN 4-9 Samsung (Samsung.com), Apple, and Google are competitors in the global marketplace. Key comparative figures for each company follow.

	Net sales	Cost of sales
Samsung	W200,653,482	W123,482,118
Apple	\(233,715	\)140,089
Google	\(74,989	\)28,164

* Millions of Korean won for Samsung.

* Millions of dollars for Apple and Google.

Required

1. Rank the three companies (highest to lowest) based on the gross margin ratio.

2. Which of the companies uses a multiple-step income statement format? (These companies’ income statements are in Appendix A.)

Short answer

Answer

1. Companies’ ranking:

Ranking	Company
1	Google
2	Apple
3	Samsung

2. Apple and Samsung are using multi-step income statements.

Step-by-step solution

Step-by-Step SolutionStep 1: Definition of Income Statement

The statement prepared by the accountant representing the net benefits generated by the business entity by reporting the expenses and the revenue of the business is known as the income statement.

Ranking (based on gross margin ratio)

Gross margin:

Particulars	Samsung	Apple	Google
Net sales	W200,653,482	$233,715	$74,989
Less: Cost of sales	(W123,482,118)	(140,089)	(28,164)
Gross Margin	W77,171,364	$93,626	$46,825

Gross margin ratio:

Year	Gross margin	/	Sales	X	100	=	Gross margin ratio
Samsung	W77,171,364	/	W200,653,482	X	100	=	38.46%
Apple	$93,626	/	$233,715	X	100	=	40.05%
Google	$46,825	/	$74,989	X	100	=	62.44%

Companies using multi-step income statement

Apple and Samsung are using multi-step income statements.