Essay on The Financial Performance Of Sioux Appliances

1974 Words Jun 4th, 2015 8 Pages
Introduction
The purpose of this report is to analyse and report on the financial performance of Sioux Appliances. It was requested by Baz, the sole owner of Sioux Appliances, and is to be submitted by Friday 5th of June, before 5:00 p.m. The scope of this report includes discussing the factors of: Profitability, Liquidity, Stability, and Asset Utilisation. The report is only restricted to the aforementioned points as there was a constraint on time frame so other topics could not be covered. A limitation of this report is that there was only five hours allocated before submitting to Baz. Also, the report only takes into account where discrepancies are, not where the exact problems are occurring.
Profitability
• Profitability is the ability that a company has in order to generate income in excess of the costs incurred in producing that income. The gross profit ratio has deviated from 65% to 66% and back to 65% which is reasonably constant. There has been a significant decrease of sales from $500,000 in 2013 to $300,000 in 2015 or a 40% decrease according the horizontal analysis. The cost of sales has also decreased simultaneously with sales, which is the primary reason that the gross profit ration has continued to remain fairly constant.
• The net profit on sales has declined from 16.3% to 1.9%. As aforementioned, sales has decreased significantly. There has been a 75% decrease in the expense for Advertising which is possibly a factor for the decline in sales. Office Wages…

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