Stitch Craft Case

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| Stitch Craft| Stitch Craft (% of Sales)| Industry Data (% of Sales)| Sales| | | | |
Fabric| $144,376 | 85%| 82| |
Patterns/books| 16871| 9.90%| 10| |
Sewing classes| 6932| 4.10%| 7| |
Other| 1621| 1%| 1| |
Total sales| $169,800 | 100%| 100| |
Cost of goods sold| 79300| 46.70%| 51| |
Gross profit| $90,500 | 53.30%| 49| |
Expenses| | | | |
Wages| $30,600 | 18%| 14| |
Supplies| 2575| 1.50%| 1| |
Rent| 15000| 8.80%| 7.5| |
Utilities| 2880| 1.70%| 1.5| |
Advertising| 9572| 5.60%| 5.5| |
Displays| 2220| 1.30%| 1| |
Travel| 375| 0.20%| 1| |
Phone| 1550| 0.90%| 0.5| |
Services| 1875| 1.10%| 0.5| |
Royalty fee (4.5% of sales)| 7436| 4.40%| 4.5| |
Depreciation and amortization| 4128| 2.40%| 2| |
Interest| 7185| 4.20%| 1| |
Other| 5654| 3.30%| 5| |
Total expenses| $91,050 | 53.60%| 45%| |
Income before taxes & owners' draw| ($550)| -0.30%| 4%| | Stitch Craft Case Analysis

1. Your job is to interview the current financial statements and all the data presented to you and make a recommendation on whether Helen and Martha should but Stitch Craft. With the income statement from last year and this month’s income and balance sheets of Stitch Craft, we can calculate and finally get a whole financial statement of Stitch Craft, which is the sheet below.

From the sheet above, I recommend that Helen and Martha should not buy Stitch Craft. There are several reasons. First we can see that the total sales of Stitch are good, comparing with the average industry. But then we can notice that expenses of Stitch are too high: the wages they offer is almost 30% higher than the average industry data, which makes the costs of the company raising. And supplies and utilities are also higher than the average industry data, when means...
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