Question

Paragraph 1: Describe in at least 4-6 sentences, minimum, which revenues and expenses most significantly contributed to the change in financial performance for the Company between 2019 and 2018. As part of your description, include descriptions of changes in accounts in terms of dollar differences and changes in percentages of water revenue. Hint: also describe the changes in the number of customers and the sales amount per customer and how these two items might be driving the financial performance of the water company

% % of Total Revenues of Total Revenues of Total Difference Revenues 2019 vs. 2018 2020 2019 2018 Water Sales $ 1,117,200 85% $ 1,064,000 84% $ 1,200,000 86% $ (136,000) Late Fees $ 78,540 6% $ 77,000 6% $ 68,000 5% $ 9,000 Hydrant fees 122,010 9% $ 124,500 10% $ 122,000 9% $ 2,500 Total Revenue $ 1,317,750 100% $ 1,265,500 100% $ 1,390,000 100% $(124,500) Cost of water sold 415,290 32% 381,000 30% 278,000 20% 103,000 Payroll expense 690,652.50 52% $ 648,500.00 51% $ 450,000.00 32% $ 198,500.00 Overhead expense 248,939.90 19% $ 262,042.00 21% $ 200,000.00 14% $ 62,042.00 Miscellaneous expense 198,066.00 15% $ 66,022.00 5% $ 78,000.00 6% $ (11,978.00) Total Expenses $ $ 1,552,948 1,552,948 11 118% $ 1,357,564 107% $ 1,006,000 72% $ 351,564 Total Income (loss) (235,198) -18% $ (92,064) -7% $ 384,000 28% $ (476,064) Customers 28,832 27,200 25,000 2,200 WATER sales per customer 38.75 $ 39.12 $ 48.00 $ (8.88)

Answer 1

Answer is given below

Comments on Financial Performance The water sales between 2018 to 2019 has decreased by $ 136,000 The main driver for this decrease is water sale per customer which has reduced from $48 in 2018 to $39.12 in 2019 Customer have increased from 25,000 in 2018 to 27,200 in 2019 So Volume growth of customers is 2,200 but average water sale per customer has decreased by $8.88 Due to lower water sale per customer overall revenue for water has reduced by $136,000 In terms of expense Cost of water sold is higher in 2019 compared to 2018 by $103,000 ( 30% in 2019 vs. 20% in 2018) Also payroll expense ( 51% vs. 32%) and overhead expense (21% vs. 14%) as % of Sales is higher in 2019 compared to 2018 This has led to net loss for the year 2019