Eco-Products, Inc.

7406 Words May 18th, 2013 30 Pages
CAPSTONE CASE 1: ECO-PRODUCTS, INC.

End-of-Case Assignments: Suggested Discussions and Analyses

A. Describe Eco-Products’ early history (1990 through 2003). Would you view the firm during that period as being a life-style business, an entrepreneurial venture, or? Why?

Steve Savage and his father founded the company in 1990 with the intent to provide eco-friendly paper and janitorial supplies. They chose to locate the business in Boulder, Colorado, a community known for its support of environmental initiatives and natural products. However, consumers were slow to adopt eco-friendly products. Margins were low and salaries were small. Friends and family supplied funds for business operations. This early history was
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Note: we are using end-of-year balance sheet items (rather than averages) in order to have three comparison years and to recognize that the firm’s business model (from a retailer of products manufactured by others to a manufacturer/wholesaler of eco-friendly products.

2005 COGS/Revenues = 2,584,326/3,649,799 = .708 = 70.8%
2006 COGS/Revenues = 3,684,492/5,751,787 = .641 = 64.1%
2007 COGS/Revenues = 7,726,455/10,867,104 = .711 = 71.1%

2005 Gross Profit Margin = 1,065,473/3,649,799 = .292 = 29.2%
2006 Gross Profit Margin = 2,067,295/5,751,787 = .359 = 35.9%%
2007 Gross Profit Margin = 3,140,649/10,867,104 = .289 = 28.9%

2005 Operating Profit Margin = 239,519/3,649,799 = .066 = 6.6%
2006 Operating Profit Margin = 98,333/5,751,787 = .017 = 1.7%
2007 Operating Profit Margin = 128,443/10,867,104 = .012 = 1.2%

2005 Net Profit Margin = 237,336/3,649,799 = .065 = 6.5%
2006 Net Profit Margin = 41,946/5,751,787 = .007 = 0.7%
2007 Net Profit Margin = -36,199/10,867,104 = -.003 = -0.3%

2005 Sales to Total Assets = 3,649,799/795,465 = 4.588 times
2006 Sales to Total Assets = 5,751,787/2,103,478 = 2.734 times
2007 Sales to Total Assets = 10,867,104/5,647,015 = 1.924 times

2005 Return on Assets = 237,336/795,465 = .298 = 29.8%
2006 Return on Assets = 41,946/2,103,478 = .020 = 2.0%
2007 Return on Assets = -36,199/5,647,015 = -.006 = -0.6%

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