Use the financial statements of The North West Company Inc to answer the following
questions:
1. Is this company a service company, merchandising company or manufacturing
company? Explain why?
2. Does this company classify its operating its operating expenses on its income statement
by nature or by function? Explain.
3. Are any non-operating revenues or expenses included on this company’s income
statement? If so, identify accounts included.
4. Calculate the company’s gross profit margin for 2016 and 2015.
5. Comment on the trend in this company’s gross profit margin and profit margin.
6. What comments, if any, about the company’s system of internal control are included in
management’s report? In the independent auditors’ report?
7. Who is primarily responsible for the system of internal controls – management of the
auditors? Explain the responsibility of each with regard to internal control.
8. Who is primarily responsible for the preparation of the financial statements? In which
report(s) are these responsibilities identified?
Using the financial statements of both The North West Company Inc and Sobeys Inc. answer
the following questions for both companies:
1. Determine the following values for each company as follows:
• Percentage change in sales revenue for the most recent year shown.
• Gross profit margin for Sobeys.
2. Which company had the bigger increase in sales?
3. Was that company able to maintain its gross margin?
4. What conclusion can be drawn from this?
5. In spite of increasing sales, one of the companies experienced a decreased gross margin.
Explain how this could occur?