Suppose that I have a company and I have given these data below for the first 3

Question

Suppose that I have a company and I have given these data below for the first 3 years. I need a small analysis for these 3 terms. 2-7 sentences for each one. I don't want forumals, I need only analysis on what they do and what would happen given the data below. like for example what happen when gross profit ratio is high or low and so on so forth "PLEASE IN YOUR OWN WORDS, DONT COPY FROM THE INTERNET".

1- Gross Profit Ratio = [year one is 66%] [year two: 61%] and [year three is 33%]

2- Operating Income = [year one is 255,222] [year two is 170,000] and [year three is -400,000]

3- Operating Margin = [year one is 12.22%] [year two is 7.23%] and [year three is -13.55%]

Explanation / Answer

Gross Profit ratio is decreasing each year. Company both operating income and margins are decreasing. We cannot say company sales are decreasing or expenses are increasing or both are happening. But company operations need a quick turnaround. The company is facing extreme pressure on its operating performance. Company need to either increase its revenues or decrease its expenses to bring it back on high performance track.

Operational income and operating margin in 3rd year has gone negative which tells company expenses are greater than revenues. As operating income has taken hit, gross margins have too declined.

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