Respond to each of the discussion posts separately listed below by telling what changes you would recommend to improve the net margin of the company based off of the below information. (250 words minimum)
Year EndingDecember 2012Year Ending December 2011Year EndingDecember 2010
Expenses295002700026000
Expenses600040003000
Discussion Post 1: Profit Margin (MK)
Calculate the net-profit margin for each of these years. Comment on the profit margin trend.
First lets calculate the net profit margin. This is done by utilizing the net profit margin ratio:
Net Profit Margin = Net Income / Net Sales(Wainwright 2012)
Using this ratio we come up with the following results:
2010: 3000 / 33000= 9.0% net profit margin
2011: 2000 / 35000 = 5.7% net profit margin
2012: 2000 / 40000 = 5.0% net profit margin
After calculating the net profit margin it can be concluded that the trend is that Cecils profit margin is continuously shrinking. There are many factors that could affect this i.e. depreciation of value each year.
Discussion Post 2: Profit Margin (CW)
Above is a comparative income statement for Cecil Inc. for the years 2010 2011 and 2012.
Profit Margin= Net Income/ Profit Sales
2010:
3000/33000 = 9.09%
2011:
2000/35000 = 5.71%
2012:
2000/40000 = 5.00%
Salaries increasedeach year and based on the data its looks like Cecil Inchas done a decent job of managing their expenses for the years indicated.The company hashoweverseen asignificantincrease in salaries as well asadministrativeexpenses over the years.I think they need to bettermonitorthese cost due to their increases over the years and the effects on the operations of the organization as whole. Sales andadministrationcost doubled and salaries increased by $6000.
Discussion 1: Profit Margins