Eco-Products, Inc.

7406 Words30 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…show more content…
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%
Open Document