Questions On Income Statement Assessment

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Serious Reader Company Trident University International 5757 Plaza Drive, Suite 100 Cypress, CA 90630 MEMO To: Owner, Serious Reader Company From: Gabe LeBlanc Date: August 14, 2016 Subject: Income Statement Assessment It has been a pleasure to be part of Serious Reader Company (SRC) and I am honored to be the one presenting you the 2015 Income Statement (IS). In compliance with your request, the Managerial accounting interpretation of the results and merely in gross margin income, statement was using Variable Costing. The cost classification is based in “all non-manufacturing categories”, direct, indirect and fixed. It includes the recommended projection on how SRC can adjust its strategies. By looking at the 2015 statement in three (3)…show more content…
In 90% of the books sold, the gross income goes up to $126,000 an approximate gain of almost 50%. Although expenses went up, the Cost of Goods Sold (COGS) recovered with way much more profitability. This goes almost the same way for the projection on the 50% increase of the costs. 3. The 50% increase of the cost also makes gains profit but not as much as the projection of 90% books sold. Because of the increase of the COGS, expenses have indeed gives a direct effect in regards to capitalization. Thus, gains were diminutive than that from the 90% increase of COGS. 4. This analysis can give you as the owner of SRC the flexibility to adjust and take another strategic approach. Analysis of Revenue The analysis of revenue will not be the basis in long term strategic planning as they are only based from a year of proceeds and returns. SRC’s original financial information gives a devastating revenue therefore, the change of plan is imperative in order to maximize net worth. It is important to give an attention of the assets and liabilities, create and developed projection with a balance estimation. Auditing It is imperative that SRC will continue to conduct financial audit, identify shortfalls, and develop approach for decision-making process. Recommendation It is at best interest to recommend that the company will take a serious look at the financial information prepared in separate format. Recommend to perform complete review and audit of all the financial information
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