Magic And Sparkle Company Case Study
While reviewing sales of company it is observed that our sales increases by 22% each year but that lead to increase in our expenses by the same percentage which leads us to be on loss side each year. Further the increase in sales is not consistent with increase in market, as market is expanding relatively more than our growth that results decrease in our market share year by year. On the other side while reviewing our expenses it is noted that expenses increases on same percentage as with sales during the year. While steps should have been taken to lower our expenses and ultimately our costs these steps was not taken previously.
More expenses than income also questioned our marketing strategy as to fix our price all relevant components of costs are not taken into account leads us to charge less price and incur more cost than price.
Further examination reveals that company receivable collection period is more than payable period results in outflow of