The gross profit percentage for Smith Clothing Retailer was 37.7% for the year ended December 31, 2016 and 42.5% for the year ended December 31, 2017. The industry average gross profit percentage, for both years, is 45.7%

Briefly discuss these findings.
What will be an ideal response

The gross profit percentage for Smith has improved from 37.5 percent for 2016 to 42.5 percent for 2017. This shows that the gross profit earned from merchandise inventory has increased and is providing more to cover the remaining operating expenses and provide for net income. This increase is a good step in reaching the industry average. Smith should work to continue this increase and to keep operating expenses under control. These two actions will improve net income.