Accounting for Merchandising Businesses

Accounting for Merchandising Operations
Name
Institutional Affiliation
The comparison below is carried out for Acers’ Swift 7 and Hewlett Packard’s HP Spectre x360 Convertible Laptop – 13t touch. The brands were released almost at the same time to address the competition in the address. The comparison has been tabulated as follows:
Item HP’sHP Spectre x360 Acer’s Swift 7
Price $929.99 $1,699.99
Delivery charges Free shipping Charged on the buyer depending on location
Financing options Available: for up to 18 months Information unavailable
Discounts Cash discount of $160 none
Coupons $220 55%
Warranties 1 year 1 year
Installation offered Windows 10 Windows 10
Recycling old components offered Trade-in accepted for all HP models The gross profit, calculated as the difference between the sales and the costs of goods sold. For their calculation, the firms need to consider the net sales by deducting any sales returns and a sales discounts or allowances (Jagelavicius, 2013). In this regard, the gross profit of a merchandising company can be accepted by the sales discounts extended to buyers, the returns outwards after sales have been made especially if delivery fees were incurred. Additionally, the gross profit can also be affected by the changes in the sales occasioned by the internal and the external factors like economic and pricing polices respectively. It could also be affected by the difference in the price of raw materials, labor charges and significant changes in the inventory systems.

The gross profit rate can be calculated as follows:
GPR=Gross profitNet salesFor acer, the FY2017 ratio is calculated as follows:
=25,361237,275*100=10.89%
For HP, the FY2017 GPR can be calculated as follows:
=252652056*100=4.85%
For Acer, it means that every 10 cents of its dollar sales go to its gross profit while for HP only 4 cents of the dollar sales go to the gross profits. In this regard, Acer is a more profitable firm than HP. I think this is the case, as the GPR used is both quantitative and qualitative metric which shows the real picture.
Reference
Jagelavicius, G. (2013). Gross margin management framework for Merchandising decisions in companies with large assortment of products. Economics and management journal, Vol. 18(1): pp. 6-16