Rjet Task 1

• Net profit margin has been negative and no major patterns over the 9 year period on net profit since the trend of the industry is based mostly on economic factors, and whether or not they secure contracts. Due to high percentage of COGS they are only left with a net profit of $980 or

7. Overall, the increase in net loss was primarily due to the lower-than-expected sales price and the increase in both marketing and fulfillment expenses.

The gross profit margin for CC is right around the industry average. Although the numbers seems to be decent, the costs of goods sold are too high. Next, looking at the operating profit margin, the numbers don’t look as great as they should. The numbers are low compared to the industry average in years 2001, 2004, and 2005. This may indicate that CC should look into their prices and costs. In 2001 the net profit margin was very low compared to the industry average. I am assuming this is due to the major expansion. It is also important to look more deeply into the numbers though because the net profit margin is lower compared to the industry average in all of the years. Once again CC should look into their costs and how efficient they are converting sales into actual profit.

Horizontal refers to the idea of one firm joining with another at the same stage of the same production process. It also allows for greater market share; achieves economies of scale; and an opportunity to enter a different market segment. An example of this would be Ford’s takeover of Volvo - both being car manufacturers.

A1. Budget Concerns Competition Bikes budget has several areas of concern that need to be address. 1. Units expected to be sold for year nine is 3510. Competition Bikes is predicting that they will sell 3510 Bikes but they only sold 3400 Bikes in year eight down 15% from year seven 4000 units sold. Competitions Bikes has budget to high because the current economic down turn is showing no signs of relief for the next three years. Many of Competition Bikes customers are sponsored riders and many sponsors have pulled their funding to their rides. Competition Bikes has not presents a plan that would support their projections. Competition Bikes should lower there should lower the expected units sold so not to over order raw materials that will

Since the Competition Bike Company projected overly optimistic sales, there are several areas in the budget that will be affected. The areas affected are Sales Commission, Transportation Out, Advertising, Research and Development, Raw Materials, and Labor.

The financial performance of the company over the years six t thirteen is shown in table no 7. The data includes Revenue generated over the years, Earning per share, Return on Investment and Stock Prices. Chart 5 shows that there has been a decline in the revenues generated. Charts 6 to 8 all show a decline in Earnings per Share, Return on Equity and Stock Prices suggesting a poor financial performance by the company.

I was pretty confident that our sales would justify the additional office and salary expense. However, as I looked at the pro forma statements it became very apparent that the sales force would sell more unit than the plant could produce. In hindsight, I should have increase production in Quarter 2 so I could keep up with future sales in Quarter 4. As a result, I did not hire new sales people but I fine tuned my advertising by copying my competitors and increased the advertising budget from $198,598 to $311,897. The pro forma income statement showed total revenues at $8,280,065 which was jump from $6,888,870. My operating profit also increased from $1,104,794 to $1,658,769. I was content with the slow but steady growth.

A vertical and horizontal analysis of each company's balance sheet and income statement in this particular case will be enlightening. A vertical analysis will for instance shed some light on how revenue is being used. In this case, each component of the companies' financial statements will be converted into a percentage of a key component of either the balance sheet or the income statement. A special common size balance sheet and income statement will be utilized to ease comparison. The

* In 2005, the profit was approximately ($144,000 / $5,500,000) 2.6% of sales; does this number indicate whether the company is doing well or not?

Simply put, the horizontal analysis compares specific line items on a financial statement to a base year and computes a percentage change for the year in question. Our horizontal analysis here uses 2013 as the base year and looks at subsequent change relative to that. On the income statement, we should be cheered Amazon’s strong 43.72% growth in net sales between 2013 and 2015, which

Although the company made strategy through original cost system, it is still unclear why the profit was declining. Might be some problem when the company was allocating the cost on both lines, and the methods to allocate will route a wrong strategy for the company.

Overall, the profit before tax of the Manufacturing Group decreased 13.24%, and the Retail Group decreased 10.77%, for a total decrease of 11.28%. In simple terms, expenses have increased, profits have decreased, and Harrington Collection hasn’t performed very well over the last several years.

Profitability ratios decreasing from 2005 to 2006 although the sales has increased substantially and the net income as well but not in the same percentage of increase due to the high reliance on debt as the interest expense increased as mentioned before.

Increase in the profits above the actual budget can be attributed to 20% increase in sales in 2009. Although Jean’s profits were above the actual budget, French Division’s earnings were much lower than what it could have been, had they budgeted for the actual volume of sales that they ended up selling. We can partly attribute this decrease in earnings to the fact