A friend, Wazir, has asked you for advice because he understands very little about accounting statements. His accountant has prepared the following summary of the last three years results of Wazir’ shoe business: Wazir tells you that in the early months of 20X5 a discount shoe operation opened near his shop. His sales suffered at first because of the competition, but after about 8 months the rival went out of business. Wazir decided, however, that he had better extend the range of inventory carried and also increase the floor area of the selling space so as to build up revenue. Since the end of 20X5 he has rented additional showroom and storage space from the business next door. Wazir would like you to explain to him the impact of these events on his business performance.
A friend, Wazir, has asked you for advice because he understands very little about accounting statements. His accountant has prepared the following summary of the last three years results of Wazir’ shoe business:
Wazir tells you that in the early months of 20X5 a discount shoe operation opened near his shop. His sales suffered at first because of the competition, but after about 8 months the rival went out of business. Wazir decided, however, that he had better extend the range of inventory carried and also increase the floor area of the selling space so as to build up revenue. Since the end of 20X5 he has rented additional showroom and storage space from the business next door.
Wazir would like you to explain to him the impact of these events on his business performance.
Questions: (indicative wordcount 280 words)
- Calculate his gross and net profit margins and
- Write a brief report.
Step by step
Solved in 3 steps
