Profitability Analysis

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Profitability Analysis Retail Food Service Total Sales 60,000,000 40,000,000 100,000,000 Gross Profit Margin 70% 45% Unit Gross Profits 42,000,000 18,000,000 60,000,000 Expenses Personal Selling 4,000,000 1,000,000 5,000,000 Sales Promotions 8,000,000 0 8,000,000 Order Processing 7,000,000 3,000,000 10,000,000 Packaging 4,000,000 1,000,000 5,000,000 Delivery 8,000,000 2,000,000 10,000,000 Labeling 2,000,000 0 2,000,000 AR Financing Costs 300,000 100,000 400,000 Inventory Carry Costs 800,000 1,200,000 2,000,000 Unit Costs 34,100,000 8,300,000 42,400,000 Other Expenses 7,560,000 5,040,000 12,600,000 Net Income 340,000 4,660,000 5,000,000 Assets Label Machine 10,000,000 0 Inventory 4,000,000 6,000,000 Total Assets 14,000,000 6,000,000 ROA 2.40% 77.60% Overall Profit Margin 1.01% 1.35% With the Retail Division's higher overall costs, it could represent some mismanagement. There is a possibility of overuse in expenses, for example, using more supplies than needed, the label machine may need maintenance or repair to prevent damaging labels that have to be thrown away, and labor may not be being utilized to maximize output per labor hour. Order processing, packaging, and delivery also indicate there could be problems with high material costs and misuse of labor hours. Delivery costs may be reduced with better delivery routing. Accounts Receivables and the financing costs indicate that
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