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Pirate Concessions

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Although it does not describe the entire picture of financial health, it does help see where money is spent a monthly basis and to see trends in the business. Pirate Concessions is fortunate because it does not have loans to repay. Additionally, unlike a traditional small business, it does not have regular operating costs; the school pays much of the overhead.

Explain the nature of balance sheets. A balance sheet is one of the major financial statements that a company prepares so that its investors and managers have visibility into the company’s financial position. The balance sheet details a company's resources and obligations. The major parts include assets, liabilities and shareholders' or owners’ equity. The balance sheet is run for …show more content…

This financial statement helps monitor progress from year to year. Throughout the year, the business manages perishable inventory to not waste product. Students handle all equipment (crockpots, popcorn poppers, microwaves, ovens, etc.) with care. Although each item is not a significant cost individually, it would cut into annual profit if students were careless and had to replace a significant portion of equipment in one year. Pirate Concessions does not show depreciation on these items because they were fully expense these items the year they were purchased.

Describe the nature of income statements. An income statement is a detailed explanation of a firm’s revenues and expenses. It is also sometimes called a profit and loss statement. Information from the income statement and the balance sheet are used to calculate financial ratios that are useful when making investment decisions. The statement is prepared for a set time period – a financial quarter or a fiscal period. When the income statement is prepared financial information is listed in the following order:
Revenues:
● Revenues from operating …show more content…

Pricing strategies are important because maximizing profits is the goal but keeping the prices reasonable for consumers. Pricing strategy has been based on historical rates; the menu and pricing had been consistent for the past five years. This year, the student managers did an analysis of product pricing and local stores and opted to alter the pricing of select item which impacted returns. Pricing analysis determined customers still purchased comparable quantities of the same items. For example, one popular item Pirate Concession sells is a walking taco. This item is a combination of fritos, chili, cheese and sour cream. The price to prepare this item is $1.01 and was traditionally sold at $2.00 for a $0.90. Student managers chose to raise the price to $2.50 and sales of the item did not alter. Profit on this item increased an average of $32.00 per game. The markup percentage increased from 98% to 147%. Student managers wanted to increase prices on candy offerings. Traditionally, candy bars have been sold at $1.00 and are purchased from the supplier for $0.33, a 200% markup. The primary consumers for candy is a young customer, whom of which often obtains the dollar from their parent/ guardian. This year, the management team has decided to leave pricing consistent, even though the markup percentage could be

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