Business Case Study: Charles Chocolate's Chocolate Company

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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.

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