Charles Chocolate’s sales revenue decreased -1.176% between the years 2010 and 2011. The equation that as used to get that was Revenue Growth= 100 × (Current Value-Prior Value/Prior Value) 100 × (11,850,480-11,991,558/11,991,558). The change in the sales revenue could have happened for very many reasons. Being a premium chocolate making company, their product may not have been very high in demand. Also forecasting the demand for their product was not a very easy thing to do either. Another issue that Charles Chocolate’s faced their competitors, such as Godiva and Lindt, are more of a well known brand then they are. Profit: How much did they make? Profit is the net earnings which is found on the income statement. To find the net earnings …show more content…
For the year 2010, the return on sales was .0892. That number is calculated by dividing the net earnings by the total sales. 2010 Return on Sales = $1,069,326 / $11,991,558 and 2011 Return on Sales = $891,082 / $11,850,460. Current ratio: This number is found by dividing the current assets by the current liabilities that is found on the balance sheet. The current ratio for 2010 was .666. This was calculated by $1550,631 / $2,326,966. The current ratio for 2011 was .905. This number was calculated by $1,543,816 / $1,705,132. Debt-to-equity ratio: The debt-to-equity ratio for 2010 is $3,738,150/ $4,781,471=.782. For the year 2011, the debt-to-equity ratio is $2,722,811/ $5,672,551=.478. This number is calculated by Total Liabilities / Owners’ Equity Inventory Turnover (2011 only): For the year 2011, the inventory turnover was calculated by the cost of good sold divided by the typical average amount of inventory. The average inventory was equal to the current inventory plus the prior inventory all divided then by two. Resulting in the 2011 Inventory Turnover to be equal to 3.480 because 5,385,088 / 1,547,223.5= …show more content…
They can make their price worth what the consumer is paying for. Decreasing the price is only helpful if people are willing to buy the product. Raising the price and decreasing the price will show noticeable differences on the net earnings. Charles Chocolate’s should also work on improving the product. This is very easy to do if you get creative with ideas. They should take into consideration the time, they sell the most chocolate, for example it is probably around Valentines Day. For the holiday they can do holiday deals or making Valentine’s Day chocolate baskets. A noticeable change would be made in the direct materials part of the income statement. Another innovative idea is doing something like a tour of the chocolate factory. People are willing to learn about things like this and it is also a cheap and super easy way to promote their product. This would effect the expenses because they would need to hire more people along with making possible alterations to the factory so they are able to conduct tours. It would also have an affect on direct labor. Charles Chocolate’s should also work on marketing and advertising by promoting their product. They can do this locally, through flyers, adds in the newspaper, or TV commercials. It is also super easy now to promote and advertise online. The final P is place. They should consider expanding their business by opening another store.
Suppliers are mostly concerned with a company 's ability to pay on their liabilities. Therefore, the current ratio and the quick ratio are both looked at by suppliers. The current ratio takes a company’s current assets and divides that by the company’s current liabilities. This number is
Net working capital represents organization’s operating liquidity. In order to compute the net working capital, total current assets are divided from total current liabilities. When there is sufficient excess of current assets over current liabilities, an organization might be considered sufficiently liquid. Another ratio that helps in assessing the operating liquidity of as company is a current ratio. The ratio is calculated by dividing the total current assets over total current liabilities. When the current ratio is high, the organization has enough of current assets to pay for the liabilities. Yet, another mean of calculating the organization’s debt-paying ability is the debt ratio. To calculate the ratio, total liabilities are divided by total assets. The computation gives information on what proportion of organization’s assets is financed by a debt, and what is the entity’s ability to pay for current and long term liabilities. Lower debt ratio is better, because the low liabilities require low debt payments. To be able to lend money, an organization’s current ratio has to fall above a certain level, also the debt ratio cannot rise above a certain threshold. Otherwise, the entity will not be able to lend money or will have to pay high penalties. The following steps can be undertaken by a company to keep the debt ratio within normal
To begin the analysis on Krispy Kreme, the first analysis is that of the depreciation analysis. There are three different methods to calculate depreciation and they are straight-line, units-of-production and double-declining-balance (Larson, Wild, & Chiappetta, 2005). The Krispy Kreme Company uses the straight-line method to calculate their depreciation on building, machinery, equipment and leasehold improvements. The breakdown of the depreciation on property and equipment consist of land, buildings, machinery and equipment, leasehold improvements and construction in process (Larson, Wild, & Chiappetta, 2005). Krispy Kreme’s total gross property and equipment in 2002 was a total of $156,484,000 and in 2003, it was a total of $252,770,000. The accumulated depreciation for the year 2002 was a total of $43,907,000 and for the year 2003, the total was $50,212,000. To find the net property and equipment amount, taking the gross property and equipment and subtracting the accumulated depreciation is the equation used. The net property and equipment for the year 2002 would be $112,577,000 and 2003 would be $202,558,000. Once b...
The 3 percent decline in sales causing a 21 percent decline in profits can be attributed to the identification of the accounting concept of operating leverage. Operating leverage is what business managers apply to boost small changes in revenue into sizable changes in profitability. Fixed cost is the force managers use to attain disproportionate changes between revenue and profitability. Therefore, when all costs are fixed every sales dollar contributes one dollar toward the potential profitability of a project. Once sales dollars cover fixed costs, each additional sales dollar represents pure profit. A small change in sales volume can significantly affect profitability (Edmonds, Tsay, & Olds, 2011). So, therefore, if sales volume increases,
The Current Ratio is calculated by taking the current debt and dividing it by the current liabilities. It is the measurement on how a company can meet its short term liabilities with liquid assets (Loth, Rihar, 2015a).A higher ratio indicates favorable activity. A company should be able to meet it responsibilities with its
Return on sales is decreasing and is below the industry average, but the goods news is that sales and profits have been increasing each year. However, costs of goods are increasing and more inventory is left over each year causing the return on sales to decrease. For 1995, it was 1.7% which is less than the average of 2.44% but is a lot higher than the bottom 25% of companies as seen in exhibit 3, which actually have negative sales return of 0.7%. Return on equity is increasing each year and at a higher rate than industry average. In 1995, it was 20.7%, greater than the average of 18.25% and close to the highest companies in exhibit 3, of 22.1% showing that the return in investment in the company is increasing, which is good for the owner.
Currently, Nicholson’s financial history boasts a 2% increase in profit annually but this percentage is way below the industry average of 6%. Cooper management proposed that if Nicholson stops selling to every market, increased efficiencies would result and cut cost of goods sold from 69% of sales to 65%. It was also suggested that the acquisition could lower selling, general, and administrative expenses from 22% of sales to 19%.
1. Context: In early September’08 Giant Consumer Products, Inc. (GCP) realized that Frozen food division, which had been growing at 2.8% (compounded annual growth) rate since 2003 to 2007 and accounted for almost 33% of GCP’s overall business volume, is not doing well now. The sales as well revenue volume is around 3.9% behind the target. Most specifically marketing margin (key parameter for GCP business) was also under plan by 4.1%. GCP had been doing well in wall-street but performance of past couple of quarters has increased the worries of GCP i.e. whether GCP will able to maintain its profitable growth.
C: Trader Joe’s management approach is interesting and has overcome its competitor such as whole food market by selling cheap product with a good quality which attract a lot of people to deal with Trader Joe’s. Moreover, whole food market considered an expensive market which make a lot of people to stop dealing with it. Therefore, they lost a lot of customers which insist them on lowering their prices. However, even though they lowered their prices, customers seem to not notice it because they found another store with cheap prices which is Trader Joe’s. In addition, most of Trader Joe’s products are made in house which mean that customers can not get their products from anywhere else other than Trader Joe’s. Finally, Trader Joe’s still has the right management approach and business model for continued
In this assignment I was asked to carry out a financial analysis of a proposal for the NOVA Corporation and to include analysis concerning the possible impact of a price change for their product in question. I was asked to consider several sales growth scenarios and expected to obtain the NPV of the project for over a five-year period. The model also needed to allow for measuring NPV as change in sales volume, price and labor cost occurred.
The total profit of a firm is equal to total revenue minus total cost. In other words, total profit equal total revenue (the amount of a firm receive for the sale of its output) minus total cost( the market value of input a firm uses in production).
Kraft Food Group has some areas in which it can grow. The company needs to fix its debt-to-assets and debt-to-equity ratios. The profit margin has been sporadic for the last five years. This is not a good trend for the company. This industry has some very external factors that can devastate the profit margin such as drought and other Asian market trends that can hurt the bottom line for this industry and company. Weather cannot be controlled. This company has a lot of different products which can be good by not putting all of your eggs in one basket approach. This can also lead the company to be stretched and pulled into many directions. The food industry can be a very up and down market because of external forces. Kraft Food Group has some problems with putting chemicals in some of their products that are now prohibited by the government. Kraft Food Group has food scientists, engineers and chemists to combat these chemicals and to develop new products and provide consistent quality of products so they can grow through sales and profits. Kraft Food Group has a high standard of quality and respect from its customers. Kraft Food Group could lose financially by food contamination. This company will continue to grow in the future if they continue to make improvements, make investments, and produce quality
The Hershey Company manufactures chocolate products and other non-chocolate confectionary products, in addition to this, the company produces gum and mint category products; the company originated from candy-manufacturer Milton Hershey’s decision to produce sweet chocolate that acts as a coating for caramels. Hershey Company is located in Pennsylvania and it began producing milk chocolate in 1900, the chocolates came in the shape of bars, wafers among other shapes; the company went into mass production and through this it was able to lower the per-unit cost and made chocolate from milk, this was considered a luxury item for the rich. With the low-cost and high quality milk chocolate, the company increased its production facilities by building new factory and by 1907 it began producing chocolate candy that were flat-bottomed made from conical milk.