Question

The owner of Nipawin Shoes Ltd., Lenore Ryerson, is puzzled. Sales in the store are higher than ever but it’s been less profitable in each of the last three years. Lenore admits that competition has been tough and she held more sales in recent years but the store is still busy and people seem willing to buy. She’s provided you with Nipawin’s summarized income statements for the last three years and has asked you to take a look and see if you can find any answers.


Required:
Examine the Nipawin’s income statements and prepare a report that explains to Lenore why profit is falling despite increasing sales. In your analysis, look at the gross margin and the gross margin percentage. Also consider the comments Lenore made about the business environment her store has been facing and the effect on net income if gross margin in 2017 was the same as in2015.


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  • CreatedFebruary 26, 2015
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