b.
Campers Limited’s operating results are significantly better than the average performance within the industry. As a percentage of sales revenue, operating profit and profit are nearly twice the average for the industry. As a percentage of total assets, profits amount to an impressive 23% as compared to 14% for the industry.
The key to success for Campers Limited seems to be its ability to earn a relatively high rate of gross profit. The company’s exceptional gross profit rate (51%) probably results from a combination of factors, such as an ability to command a premium price for the company’s products and production efficiencies which led to lower manufacturing costs.
As a percentage of sales, Campers Limited’s selling expenses are five points higher than the industry average (21% compared to 16%). However, these higher expenses may explain the company’s ability to command a premium price for its products. Since the company’s gross profit rate exceeds the industry average by 8 percentage points, the higher-than-average selling costs may be part of a successful marketing strategy. The company’s general and administrative expenses are significantly lower than the industry average, which indicates that Campers Limited’s management is able to control expenses effectively.