QUESTION

$[40$ MARKS$]$

You work for a global shoe company called Shoes & Co$,$ and you are required to analyse the impact of the current supply chain design. Use the strategic profit model to perform the required analysis.

The company's financials are provided below with a $20\%$ corporate tax rate. Answer the following questions:

$1\mathrm{.}1$ Indicate by how much Logistics Expenses must decrease to achieve a ROA of $32\%.$

$1\mathrm{.}2$ Inventory holds up working capital for an organisation, you believe by reducing inventory by $20\%$ would be even more beneficial at improving the $32\%$ ROA. Illustrate this in the SPM

$1\mathrm{.}3$ Analyse findings in $1\mathrm{.}1$ and $1\mathrm{.}2$

$(15)$

$(10)$

$\backslash$table$[[$SHOES AND CO $($PTY$)$ LTD$],[$STATEMENT OF PROFIT & LOSS FOR THE YEAR$],[,],[$SALES $31$ DECEMBER $2022,],[$COST OF SALES,$299,990],[$GROSS PROFIT,$179,990],[$TRANSPORTATION$,120,000],[$WAREHOUSE COSTS,$29,993],[$INVENTORY CARRYING COSTS,$3,993],[$OTHER OPERATING COSTS,$14,993],[$TOTAL OPERATING COSTS,$56,972$