Question

Koreatown Merchandising Company Financial Data Dollar Percen 2015 $ 450,000 300,000 80,000 30,000 $ 40,000 Change Change 50,000 |-10% 380,000-420,000 |-4,5% 60,000 sa 0,000 133% 5000 | 20% 2014 $ 500,000 Sales Cost of Goods Sold Operating Expenses Income Taxes 25,000 Net Income sooo 5% Comparative Analysis Directions: Compute the year-over-year dollar change in each item. Then compute the percent change for each item. Use 2014 as the base year. That means you will subtract 2014 from 2015 to compute the dollar change and you will divide by 2014 amounts to get the percent change for 2015 After you have completed the calculations, write a paragraph in which you analyze the performance of Koreatown Merchandising Company based on the information you have just calculated from their finance statement data.

Answer 1

	2015	2014	Dollar Change	Percent Change
Sales	$450,000	$500,000	$           50,000	10%
Cost of Goods Sold	$300,000	$380,000	$           80,000	21%
Operating Expense	$ 80,000	$ 60,000	$         -20,000	-33%
Income tax	$ 30,000	$ 25,000	$           -5,000	-20%
Net Income	$ 40,000	$ 35,000	$           -5,000	-14%

In 2015, sales of the company reduced by 10% while corresponding reduction in cost of goods sold is 21%. Meaning there will be increase in Gross Margin by 25% i.e. $30,000. Though there is reduction in sale, however margin has improved.

Operating Expense has gone up by 33% which is ultimately contributing reduced net income by 14%.

Improved Gross Margin contributing higher tax as well.