In: Finance
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 |
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Income Statement |
Income Statement |
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Dec. 31, 2017 |
Dec. 31, 2017 |
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2016 |
2017 |
2016 |
2017 |
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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 |
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.