Question

In: Finance

2. Excerpts from the financial statements for two restaurant chains in Hollister, MO are shown below....

2. Excerpts from the financial statements for two restaurant chains in Hollister, MO are shown below.

Please calculate the overall and comparative sales increases for both companies and compare and contrast the numbers. Comment on the growth and health of each company.

Koi Gardens

Grandma’s Kitchen

Income Statement

Income Statement

Dec. 31, 2017

Dec. 31, 2017

2016

2017

2016

2017

Sales Store 1

450,000

520,000

Sales Store 1

430,000

510,150

Sales Store 2

210,000

210,750

Sales Store 2

NA

155,500

Sales Store 3

NA

150,000

Solutions

Expert Solution

I) Income statement :

Koi Gardens

Particulars 2016 2017
Sales store 1 4,50,000 5,20,000
Sales store 2 2,10,000 2,10,750
Sales store 3 NA 1,50,000
Total sales 6,60,000 8,80,750

Grandmas Kitchen

Particulars 2016 2017
Sales store 1 4,30,000 5,10,150
Sales store 2 NA 1,55,500
Total sales 4,30,000 6,65,650

II) Comparison between 2 companies :

Particulars 2016 - Koi Gardens 2016 - Grandma's Kitchen 2017 - Koi Gardens 2017 - Grandmas Kitchen
Sales store 1 4,50,000 4,30,000 5,20,000 5,10,150
Sales store 2 2,10,000 NA 2,10,750 1,55,500
Sales store 3 NA - 1,50,000 -
Total sales 6,60,000 4,30,000 8,80,750 6,65,650

Analysis :

a) Sales increase % over a year = (Sales of 2017 - Sales of 2016) / Sales of 2016

For Koi Gardens = (8,80,750 - 6,60,000) / 6,60,000 = 0.3345 or 33.45%

For Grandmas Kitchen = (6,65,650 - 4,30,000) / 4,30,000 = 0.5480 or 54.80%

b) As per the above calculation, it is clear that sales of Grandmas Kitchen is increasing much higher rate than that of Koi Gardens sales.

c) But when we compare the figures of sales then Koi Gardens has greater sales amounts than that of Grandmas Kitchen. The reason behind is extra sales store than Grandmas Kitchen.

d) In terms of growth, Grandmas Kitchen business is growing with higher sales rate which shows it's greater efficiency on the part of sales and which will benefit to the comapany in long term.


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