Page 12 - OCS Workbook - Day 1 Suggested Solutions (May 2018)

CIMA MAY 2018 – OPERATIONAL CASE STUDY

CHAPTER SIX – F1

EXERCISE 1 – FINANCIAL STATEMENTS

Ratio 2018 (budget) 2017 2016

Growth in revenue 6.2% 7.9%

Growth in cost of sales 8.1% 8.4%

Growth in gross profit 5.0% 7.6%

Gross profit margin 61.1% 61.8% 62.0%

Growth in operating expenses 5.2%

Growth in operating profit 20.0%

Operating margin 4.5% 4.0%

Inventory days 243 273

Receivables days 32 25

Payables days (161) (171)

Length of operating cycle 114 127

Question Response

Did Mansako perform Positives
well in 2017? • Revenue and gross profit up by over 7%, which is impressive given
overall lack of market growth
• Gross margins stable
• Operating profit up 20.0%
• Reduction in inventory days
• Increase in cash
Negatives
• Operating margins seem very low for a luxury product
• Big increase in receivables
• Inventory days still seem very high

54 KAPLAN PUBLISHING