The following information comes from P Co.'s income statements for 2010 and 2009:
1.Compute the gross profit percentage for
a.2012 __________
b.2011 __________
2.Provide at least two potential causes for the change in P Co's gross profit percentage.
Definitions:
Commodity Traders
Individuals or entities that buy and sell physical or financial commodities, aiming to profit from price fluctuations.
Bid-ask Spreads
The variation between the top price a buyer intends to pay (bid) and the bottom price a seller is prepared to take (ask) for an asset.
Market Equilibrium
The state in which market supply and demand balance each other, and as a result, prices become stable.
Competitive Industry
Competitive industries are characterized by three factors: (1) firms produce a product or service with very close substitutes meaning demand is very elastic, (2) firms have many rivals and no cost advantage over those rivals, and (3) the industry has no barriers to entry or exit.
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