GM Stores is a retail company that specialises in selling household and electronic goods. GM Stores...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
GM Stores is a retail company that specialises in selling household and electronic goods. GM Stores also started offering cloud computing services and has invested a lot in these technologies in recent years. Cloud computing is a service where customers store data on the web as opposed to storing them in their personal computers. It has the advantage that customers are likely not lose their information should their computers crash. GM also offers VIP membership to customers who prefer faster deliveries when they order. The membership fee is N$40 per year. Most of the logistics for the company are done in house. Since last year there has been a 20% growth in electronic goods demand in general owing to the pandemic and lock downs requiring people to stay at home most of the times. On average, other companies in the cloud computing sphere have recorded growth rates of about 50% and gross profit margins of about 80% in the past year. GM stores operates in a market that is highly price competitive and have successfully manage to keep their price stable over the years. This has been facilitated by its ability to source household goods from South Korea where labour costs are considered low. You have been provided with the financial information for GM Stores for the past two years as follows: Notes 31-Dec-20 31-Dec-19 N$000 N$000 94 660 82 320 (54 531) (51 708) 40 129 30 612 Revenue Cost of sales Gross profit Administration costs Distribution costs Other operating costs Net profit Notes: 1. Break down of revenue Household goods Electronic goods Cloud computing services VIP membership fees 2. Break down of cost of sales Household goods Electronic goods Cloud computing services VIP membership fees 1 2 3 (2 760) (13 420) (140) 23 809 31-Dec-20 N$000 38 990 41 870 12 400 1400 94 660 31-Dec-20 N$000 23 394 26 797 4 240 100 54 531 (1 720) (13 180) (110) 15 602 31-Dec-19 N$000 41 160 32 640 6 520 2 000 82 320 31-Dec-19 N$000 28 812 21 216 1 580 100 51 708 3. Administration The cost of running the customer services department is included in the administration costs above. This is a department works with disgruntled customers. The costs of customer service was N$860 000 in 2019 and N$1 900 000 in 2020. 4. Non-Financial data Percentage of orders delivered on time Number of customer complaints Number of customers Percentage of late VIP members delivery 31-Dec-20 74% Calculations - 15 marks Discussion and application 15 marks Total 1 400 000 7 100 000 14% Required: Assess the performance of GM Store for the year ended 31 December 2020. Your answer should include both financial and non-financial measures of performance. You will be marked as follows: 31-Dec-19 92% 320 000 6 500 000 2% Marks 30 Sub- total 30 Total 30 GM Stores is a retail company that specialises in selling household and electronic goods. GM Stores also started offering cloud computing services and has invested a lot in these technologies in recent years. Cloud computing is a service where customers store data on the web as opposed to storing them in their personal computers. It has the advantage that customers are likely not lose their information should their computers crash. GM also offers VIP membership to customers who prefer faster deliveries when they order. The membership fee is N$40 per year. Most of the logistics for the company are done in house. Since last year there has been a 20% growth in electronic goods demand in general owing to the pandemic and lock downs requiring people to stay at home most of the times. On average, other companies in the cloud computing sphere have recorded growth rates of about 50% and gross profit margins of about 80% in the past year. GM stores operates in a market that is highly price competitive and have successfully manage to keep their price stable over the years. This has been facilitated by its ability to source household goods from South Korea where labour costs are considered low. You have been provided with the financial information for GM Stores for the past two years as follows: Notes 31-Dec-20 31-Dec-19 N$000 N$000 94 660 82 320 (54 531) (51 708) 40 129 30 612 Revenue Cost of sales Gross profit Administration costs Distribution costs Other operating costs Net profit Notes: 1. Break down of revenue Household goods Electronic goods Cloud computing services VIP membership fees 2. Break down of cost of sales Household goods Electronic goods Cloud computing services VIP membership fees 1 2 3 (2 760) (13 420) (140) 23 809 31-Dec-20 N$000 38 990 41 870 12 400 1400 94 660 31-Dec-20 N$000 23 394 26 797 4 240 100 54 531 (1 720) (13 180) (110) 15 602 31-Dec-19 N$000 41 160 32 640 6 520 2 000 82 320 31-Dec-19 N$000 28 812 21 216 1 580 100 51 708 3. Administration The cost of running the customer services department is included in the administration costs above. This is a department works with disgruntled customers. The costs of customer service was N$860 000 in 2019 and N$1 900 000 in 2020. 4. Non-Financial data Percentage of orders delivered on time Number of customer complaints Number of customers Percentage of late VIP members delivery 31-Dec-20 74% Calculations - 15 marks Discussion and application 15 marks Total 1 400 000 7 100 000 14% Required: Assess the performance of GM Store for the year ended 31 December 2020. Your answer should include both financial and non-financial measures of performance. You will be marked as follows: 31-Dec-19 92% 320 000 6 500 000 2% Marks 30 Sub- total 30 Total 30
Expert Answer:
Related Book For
Financial Accounting Tools for business decision making
ISBN: 978-0470534779
6th Edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
Posted Date:
Students also viewed these accounting questions
-
The Tusquittee Company is a retail company that began operations on October 1, 2018, when it incorporated in the state of North Carolina. The Tusquittee Company is authorized to issue 100,000 shares...
-
Beaver Limited is a retail company that sells sporting goods. The company has a customer loyalty program that allows customers to earn points based on sales made. These points can be accumulated and...
-
Kind Travel is a travel company that specialises in package travel experiences in environmentally sensitive destinations. The popularity of these tours has been growing over the last few years, and...
-
Explain the purpose, uses and advantages of classified statements of cash flows prepared in accordance with IAS 7.
-
Consider the following abbreviated financial statements for Weston Enterprises: a. What was owners equity for 2009 and 2010? b. What was the change in net working capital for 2010? c. In 2010, Weston...
-
Two spherical cavities, of radii a and b, are hollowed out from the interior of a (neutral) conducting sphere of radius R (Fig. 2.49). At the center of each cavity a point charge is placed???call...
-
Explain how letters of credit protect sellers in overseas sales of goods transactions. Explain how they protect buyers in overseas sales of goods transactions.
-
A paced assembly line has been devised to manufacture calculators, as the following data show: a. What is the maximum hourly output rate from this line? b. What cycle time corresponds to this maximum...
-
6.Max Co is a large multinational company which expects to have a $10m cash deficit in one month's time. The deficit is expected to last no more than two months. Max Co wishes to resolve its...
-
Reproduced below from Farthington Supply's accounting records is the Accounts Receivable Subledger along with selected General Ledger accounts. During the year 2014, there were no recoveries of...
-
Your city has a voluntary health and welfare organization (VHWD) that provides musical opportunities for inner-city youth. It does not use fund accounting, but it does identify all revenues by their...
-
Given: X -4 -3 -2 34400 4.5 8 Y 10 4 0 -2 -3 0 4 10 18 28 40 Plot this set of data and decide which type of regression that it is. A) Linear Regression B) Quadratic Regression C) Cubic...
-
Assume that a firm has weighted average cost of capital of 3.6% with a corporate tax rate of 21%. The pre-tax cost of debt is 3.1%. In case the firm would have no debt, the cost of equity for the...
-
Your grandmother will be giving you $10,000 every year for the next five years, the first payment beginning at the end of the first year A) If you invest these receivables in a bank at 6%, what is...
-
After the company issues an initial public offering and they desire to offer additional shares, one option is the seasoned equity offering. What are the differences between a convertible bond and a...
-
Can you explain how drilling and sampling are important in geotechnical engineering?
-
X Corporation pays its salesperson $3,000 fixed salary per month plus an 8 percent sales commission on all sales the salesperson generates. The fixed salary portion is paid for in the month earned,...
-
What are some of the possible sources of information about a company that could be used for determining the companys competitive stance?
-
Olstad Company issued $350,000 of 8%, 20-year bonds on January 1, 2012, at face value. Interest is payable annually on January 1. Instructions Prepare the journal entries to record the following...
-
Who are the internal users of accounting data? How does accounting provide relevant data to the internal users?
-
Here is financial information for Pauletti Inc. InstructionsPrepare a schedule showing a horizontal analysis for 2012, using 2011 as the base year. December 31, 2012 December 31, 2011 Current assets...
-
Why is the analyzing step of the process crucial to the success of a MedImmune proposal? In the discussion, draw students attention to the intersection of medical, legal, and social issues. Why is...
-
How does the Clinical Trial Application guide described in the example make the composing process for a new document easier? How is it informed by the evaluation process? What metaphors or analogies...
-
What are the advantages and disadvantages of the following other options: making an announcement on the companys internal website, sending a memo to each employee, sending an email to each employee,...
Study smarter with the SolutionInn App