An integral part in performing a horizontal analysis is the ability to see the variation from one period to the next which are called trends (Horizontal analysis, n.d.). . Within the income statement, net sales increased by 33.3%, $150k, from Year 6 to Year 7. Then, a drastic decrease of 15% which is roughly $900k, took place from Year 7 to Year 8. The 33% increase showed the strength of the company, but the huge drop in sales demonstrated how Competition Bikes, Inc. (CB) struggled to attain a surge in its revenue which is the result of the 15% decline in sales caused by economic situations.
This is a sign of weakness. It should be noted that the percentage reduction is larger the percentage reduction in sales and cost of goods sold. OPERATING EXPENSES Selling Expenses Advertising was up from year 6 to year 7 by $8,940 or 37.5%. From year 7 to year 8 operating expenses were down $5,332 or -16.3%. This is weak and raises questions about why management would decrease advertising so much.
Hallstead Jewelers Required: How has the breakeven point in number of sales tickets (number of customers orders written) and breakeven in sales dollars changed from 2003, to 2004, and to 2006? How has the margin of safety changed? What caused the changes? The breakeven point has increased for both sales dollars and sales tickets from 2003 to 2006. The safety margin has also decreased over the time period.
We see this again from 2004 all the way to 2010 with unemployment increasing to 10%. We can see that the economy hits a recession after roughly 10 years of gradual expansion. Okun’s Law states that for every 1% rises in Unemployment, GDP decreases by roughly 3%. The above Scatter Plot chart shows data from 1981 to 2010 and we can see that for every 1% rise in Unemployment over this period, GDP dropped by 0.4%. This shows a negative slop and that the relationship is relatively weak due to the fact the GDP has decreased by less than 1%.
Centralia store’s sales have been below budget for the last quarter of 2002 and this first quarter of 2003. Still, operating margins are near plan due to sales of slightly higher gross margin items and a reduction in operating expenses. They have also had a higher customer count for this first quarter (Kerin & Peterson, 1998/2010, pp. 484-495). Market Conditions Centralia, Missouri had food and beverage sales of $62.3 million in 2002, which was a 4.6 percent increase over the previous year.
It is evident that Target Corporation was capable of meeting its current liabilities since the current assets exceeded the current liabilities. The financial crisis causes the increase of the working capital between 2004 and 2005 but a substantial decline of the same between 2005 and 2006. Current ratio 2002 – 2004: Current ratio = Current assets/Current liabilities 2006 Current ratio = $14,405./$9,508. =1.52:1 2005 Current ratio = $13,922./$8,220 =1.69:1 2004 Current ratio = $12,952./$8,314. =1.56:1 Just like the working capital Target Corporation current ratio slightly increased between 2004 and 2005 reaching 1.69:1 but declined between 2005 and 2006 to stand at 1.52:1.
Net Profit Margin The relationship between the final profit and sales. It shows the percentage of sales income that remains after taking account of all expenses. Premier Investments had a significantly large loss within the time period from 16.11% to 9.54%. Such a large decrease, 6.57%, shows that after all expense the company made a lot less than last year. Gross Profit Margin represents the relationship between the gross profit earned for a period and the sales for the same period.
Audi's global sales rose 8.3% to 1.58 million vehicles in 2013 however despite the increase in revenue, the net profit fell 7.7% ($5.57billion) and the operating profit margin fell to 10.1% from 11% the previous year. Based on this one could assume Audi is experiencing diseconomy of scale. But when you dig deeper into their situation the reasons for a lower net profit is not because of a “per-unit” cost of production which would truly mean they are operating as a diseconomies of scale. The true reasons appear to be because of their expansion investments. As per the article Audi “warned that profit would be hit by investment in new models and tougher climate regulation”.
In B&L’s 1993 annual report, it stated that “contact lens revenues rose 13% over 1992 and finished the year strongly”. Furthermore, although market demand for conventional lenses went down in 1993 (shown in Exhibit 6), B&L still successfully reduced its inventory by 1.8 million pairs. B. However, based on the information above, we can observe that B&L’s new sales strategy was to make distributors absorb inventory and improperly recognize it as revenues, which actually polished its financial report of 1993. 2.