Question

Consider the financial performance comparisons. Provide analysis (150 to 180 words) to describe the comparisons.

KLM Company Comparison of financial performance 2012 and 2013
Account	2012	2013	$ Difference	Per Cent	Common Size (per cent of sales income)
					2012	2013
Sales Income	$230,000	$320,000	$90,000	39	100	100
Cost of sales	$115,000	$165,000	$50,000	43	50	51.6
Wage Costs	$30,000	$45,000	$15,000	50	13	14
Transport Costs	$25,000	$35,000	$10,000	40	10.9	10.9
Marketing Costs	$15,000	$20,000	$5,000	33	6.5	6.3
Total costs	$185,000	$265,000	$80,000	43	80.4	82.8
Profit	$45,000	$55,000	$10,000	22	19.6	17.2

Answer 1

KLM Company Comparison of financial performance 2012 and 2013
Account	2012	2013	$ Difference	Per Cent	Common Size (per cent of sales income)
					2012	2013
Sales Income	$230,000	$320,000	$90,000	39%	100	100
Cost of sales	$115,000	$165,000	$50,000	43%	50	51.6
Wage Costs	$30,000	$45,000	$15,000	50%	13	14
Transport Costs	$25,000	$35,000	$10,000	40%	10.9	10.9
Marketing Costs	$15,000	$20,000	$5,000	33%	6.5	6.3
Total costs	$185,000	$265,000	$80,000	43%	80.4	82.8
Profit	$45,000	$55,000	$10,000	22%	19.6	17.2

SL	Accounts	Performance Caparison	Remarks
1	Sales	Sales of Company has increased from $230 thousands to $320 thousands which indicates a percentage growth of 39% which is goods for company performance as sales has increased by $90000	Favorable for Organization
2	Cost of Sales	Cost of Sales has increased from $115 thousands to $165 thousands which is not got for company because if we look at common size percentage then we observe that there is additional increment of 1.6% in cost of sales then last years , which is indicating inefficiency in cost of production and sales overhead .	Unfavorable for Organization
2	Wages costs	Wages cost has been increased from $30000 to $45000 and increment is by $ 15000 which not good indicator of financial performance as there is 1% increase than last year keeping in view the growth in sales over last year wages should have near about $41600	Unfavorable for organization
4	Transportation Cost	Transportation cost has though increased from $25000 to $35000 but it still maintains the same percentage in common size statement of 10.9% of sales values therefore its neither favorable nor unfavorable but company should re think about various options so that overall cost to sales percentages can be reduced in future.	neither favorable nor unfavorable
5	Marketing Cost	There is increment of $5000 in Marketing cost But considering the growth in sales we can observe that Marketing Cost has not increase in the same proportion as sales growth so it’s good indicator of better cost cutting and efficiency of sales Department	Favorable for organization
6	Total Cost	Overall total cost has increase due to unfavorable increase in wages in and cost of sales	Unfavorable for organization
7	Profit	Though overall Profit has increased from $45000 to $55000 by $10000 which in mainly due to increase in sales yet company could have increased its profit if Cost of Production and wages could have been in the same proportion as it was in the last year.	Overall growth Favorable for Organization