Page 17 - SCS May 2018 - Day 1 Suggested Solutions

SUGGESTED SOLUTIONS

EXERCISE 2

Couchweb
2018 2017
% of change % of
revenue % absolute revenue
Revenue 100.0% 13,226.0 22.19% 2,402 10,823.8 100.0%
Cost of Sales 69.5% (9,192.1) 23.44% 1,746 (7,446.4) 68.8%
Gross profit 30.5% 4,033.9 19.44% 657 3,377.4 31.2%
R&D expense 8.1% (1,069.5) 25.20% 215 (854.2) 7.9%
Other Op. exes 14.2% (1,880.2) 15.35% 250 (1,630.0) 15.1%
Operating profit 8.2% 1,084.2 21.38% 191 893.2 8.3%
Finance charges 1.4% (184.0) 8.24% 14 (170.0) 1.6%
Profit before tax 6.8% 900.2 24.47% 177 723.2 6.7%
Tax 1.6% (215.8) 10.16% 20 (195.9) 1.8%
Profit for year 5.2% 684.4 29.79% 157 527.3 4.9%

HomeVideo
2018 2017
% of change % of
revenue % absolute revenue
Revenue 100.0% 9,447.1 10.00% 859 8,588.3 100.0%
Cost of Sales 72.1% (6,809.0) 10.00% 619 (6,190.0) 72.1%
Gross profit 27.9% 2,638.1 10.00% 240 2,398.3 27.9%
R&D expense 6.3% (594.2) 12.01% 64 (530.5) 6.2%
Other Op. exes 14.2% (1,343.0) 30.00% 310 (1,033.1) 12.0%
Operating profit 7.4% 700.9 -16.03% (134) 834.7 9.7%
Finance charges 1.9% (177.4) 77.40% 77 (100.0) 1.2%
Profit before tax 5.5% 523.5 -28.75% (211) 734.7 8.6%
Tax 1.3% (125.5) -36.93% (74) (199.0) 2.3%
Profit for year 4.2% 398.0 -25.70% (138) 535.7 6.2%

Commentary:

2018 seems to have been a fairly good year for Couchweb.

Revenue has increased by a notable 22.19%. However, cost of sales has risen slightly more than
this (23.44%) resulting in an increase of 19.44% in Gross profit.

The increase in R&D expense (25.2%) is rather higher than the gross profit increase but this only
accounts for 8.1% of revenue. On the other hand other operating expenses have only risen by
15.35% and, as this comprise 14.2% of revenue, this smaller than the gross profit increase has

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