Question:
Manufacturers such as Research In Motion, Apple, and Palm usually work to maintain a high-quality and low-cost operation. One ratio routinely computed for this assessment is the cost of goods sold divided by total expenses. A decline in this ratio can mean that the company is spending too much on selling and administrative activities. An increase in this ratio beyond a reasonable level can mean that the company is not spending enough on selling activities. (Assume for this analysis that total expenses equal the cost of goods sold plus selling, general, and administrative expenses.)
Required
1. For Research In Motion, Apple, and Palm refer to Appendix A and compute the ratios of cost of goods sold to total expenses for their two most recent fiscal years. (Record answers as percents, rounded to one decimal.)
2. Comment on the similarities or differences in the ratio results across both years among the companies.