Review each products contribution to sales in term of profit

Reference no: EM131112948

A financial team has been properly selected and charged to proceed with its analysis of EEV's financial statements. In the course of its evaluation, it will be assessing the firm's operating performance, benchmarking its competitors, and looking at the industry using financial ratios as its source of measurement.

Electronic Equipment Venture Income Statement Thousands


	2008	2009	2010 (Fsct)
Net Sales	98800	108000	113500
Cost of good sold
Total cost of good sold	68500	80250	85425
Gross Profit	30300	27750	28075
%	31%	26%	25%
Expenses
General & Administrative	3500	5300	5700
Marketing	7500	8500	9000
Operating Expense	9900	10610	11120
Total Expenses	20900	24410	25820
Income Before Taxes	9400	3340	2255
Taxes	3760	1336	902
Net Income	5640	2004	1353
Headcount
Direct	2080	2400	2500
Indirect	320	350	400
Total Headcount	2400	2750	2900

Products	2008			2009			2010 Fcst
	Sales	Margin	%	Sales	Margin	%	Sales	Margin	%
Electronic Equipment
Television	4000	1000	25%	3500	900	26%	5000	1045	21%
Computers	5000	2400	48%	5200	2300	44%	7600	3300	43%
Medical	2300	1500	65%	3500	2000	57%	4000	1800	45%
Automotive	15000	3200	21%	16000	2800	18%	15400	3000	19%
Electronic Equipment Total	26300	8100	31%	28200	8000	28%	32000	9145	29%
Electronic Equipment Parts
Television	12000	3200	27%	13000	3050	23%	12000	2230	19%
Computers	44500	13000	29%	50000	10500	21%	48000	10500	22%
Medical	6000	3500	58%	7000	3700	53%	7500	3700	49%
Automotive	10000	2500	25%	9800	2500	26%	14000	2500	18%
Electronic Equipment Parts Total	72500	22200	31%	79800	19750	25%	81500	18930	23%
Total	98800	30300	31%	108000	27750	26%	113500	28075	25%

The income statement measures the firm's profitability over a period of time: 1 month, 1 quarter, or 1 year. The statement focuses on the operations of the firm and explains what was produced and sold. In essence, it summarizes revenues generated and the results.

Tony understands that managing profitability involves overseeing 3 interrelated factors: volume, cost, and price. He has given you the job of conducting an in-depth analysis of EEV's operating performance. You will analyze the following factors:

• Sales volume, cost, and price of each specific product
• Each product's contribution to sales in terms of profit
• The relationship between sales and supportive employment

Tony has made it clear that he expects you to initiate a constructive discussion by describing your findings both in narrative form and through an organized numeric presentation.

View the EEV income statement, and then complete the following in your paper:

• Review the sales volume, cost, and price of each specific product.
• Review each product's contribution to sales in terms of profit.
• Describe the relationship between sales and supportive employment.

Provide an Excel spreadsheet that depicts your findings along with your analysis.

Reference no: EM131112948

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