Question

2. Complete the following grid: Store 3 Ner Sales Cast of goods sold Gros margin-dollars Groos margin-percent Expenses---dollars Expenses-percent Net income-dollars Net income-percent Dollars expressed in millions Store 1 Store 2 Store 4 Store 5 Store 6 $12.0 80.7 $155.0 1,438.8.131.6 $4,056.7 6.1 $42. 6 5 9.2 $951.2 $90.0 1,619.5 $5.9 $38.1 65.8 $487.6 41.6 $2,387.2 49.2% 47.2% 61.8% 33.9731.6% 58.8% $4.2 31.9 $88.2 464.9 $41.1 2,259.7 35.0% 39.5% 56.9% 32.3% 31.2% 55.71 1.7 $6.2 $7.6 $22.7 $0.5 $128.5 114.2% 7,7% 4,9% 1.6% 0.4% 3.2% 3. Review the component percentages for each store in problem 2 above. Which store is the best performer? The poorest performer? What advice would you give to the poorest performer relative to improving performance? Suggest how to increase net income by increasing gross margin and/or decreasing expenses by specific dollar amounts. Problem #3

Answer 1

Answer:

Best Performer

Percentage wise Store 1 has highest percentage of profit to sales which is 14.2%. But Volume wise Highest profit is of Store 6 i.e $128.5. Though its profit percentage is 3.2%.

Poorest Performer

Percentage wise poorest performer is Store 5 having profit margin of 0.4% to sales. Its net profit is $ 0.5.

Advice to the Poor performer Shop is either of the follows

1) Increase Gross Margin by at least 5% of sales

or

2) Reduce Expenses by 5% of the sales

to make operations more viable.