1. What are the most striking data and information from the income statement? 2.
ID: 2752062 • Letter: 1
Question
1. What are the most striking data and information from the income statement?
2. What does the income statement show about operations, service, and competition to name a few?
3. What supporting concepts on marketing and management could you write and apply so that the readers can see further your analysis of the operations, marketing and management of the restaurant?
Answering these key questions in a data commentary for this section will provide good closure and substance to your paragraphs and discussions.
Explanation / Answer
The data presented here is spread over a period of 5 years from 2010 to 2014 which provides a basis for analysis of data in a more explanatory and comparative way.
We can actually see the differentials for each year in each of the items presented in the statement of Income.
The Revenues have grown from $1835922 in 2010 to $4108269 showing a great growth in Revenues each year which is mostly growing at the same percentage.
The data for the operating expenses shows that the expenses are in line with the Revenues and they do not exceed much .
The income from operations is also growing at a steady pace maintaing a healthy growth rate from 287831 in 2010 to 710800 in 2014 increasing every year at a healthy growth rate.
The net income has also grown over the years which suggests that the business is in a healthy state and that the business it is carrying does not require any special treatment, it can do more than fine by doing the things the way they were done.
Basic Earning Per share is a rough measurement of the amount of a company's profit that can be allocated to one share of its stock. Basic earnings per share (EPS) do not factor in the dilutive effects on convertible securities. Basic EPS is calculated as follows:
Basic EPS = (net income – preferred dividends) / weighted average number of common shares outstanding
If a company has a simple capital structure, meaning that it has not issued any potential dilutive securities, basic EPS can be a useful metric on its own.
For companies that have a complex capital structure (that is, they have issued potential dilutive securities), diluted EPS is considered to be a more precise metric than basic EPS. Diluted EPS takes into account all of the outstanding dilutive securities that could potentially be exercised (such as stock options and convertible preferred stock) and shows how such an action would impact earnings per share. Companies with a complex capital structure must report both basic EPS and diluted EPS to provide a more accurate picture of their earnings per share; basic EPS will always be the higher of the two. If the company has a simple capital structure, it only needs to report basic EPS.
The answers for the specific points are given below:
1. The most striking data and information from the income statement for an analyst and general public is the Earnings per share both basic and diluted as it provides the information about the Rate of returns that a potential investor would get if he invests his funds in the company and the Revenues are always the striking data.
2. The income statement shows that the Restaurant is in a growing state and is excelling in every way not only in Operations, services and competition but in general it is doing comaparatively well.
3. Concepts on marketing and management which could further analyse operations, marketing and management of the restaurant are:
Production Concept – Consumers prefer products that are widely available and inexpensive. The production concept is more operations oriented than any other concept.
Product Concept – Consumers favor products that offer the most quality, performance, or innovative features. The product concept believes in the consumer and it says the consumers are more likely to be loyal if they have more options of products or they get more benefits from the product of the company.
Selling Concept – Consumers will buy products only if the company aggressively promotes or sells these products. Off course, in this era of marketing, we know that selling is not the only tactic to sell your product. You have to focus on marketing as well.
Marketing Concept – Focuses on needs/wants of target markets & delivering value better than competitors. The marketing concept believes in the pull strategy and says that you need to make your brand so strong that customers themselves prefer your brand over every other competitor. This can be achieved through marketing.
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