Income statements

Marty runs a book shop in the city centre. He has been looking at how financially successful his business is. Table 1.1 shows an extract from the accounts. Over the last 2 years, revenue has fallen by 50%. Marty believes that rising competition is one cause of this. He intends to alter his pricing strategy. He is also thinking about the different promotion methods he could use to boost sales.

May/June 2021

FLD operates as a furniture retailer. It runs 460 shops and employs 20 000 people. When new shop managers are hired, internal recruitment is used. The Managing Director wants to find out whether job rotation is the most effective motivation method for use in a large business. The Finance Director is checking FLD’s income statement. An extract appears in Table 2.1. She is worried that FLD’s gross profit is falling.

May/June 2025

BFF produces a variety of computer screens, which it sells to other manufacturers. The Managing Director has been reviewing BFF’s income statement and is concerned about what an increase in material costs will do. She commented: ‘Advances in technology have made our production methods better. BFF must stay competitive because imports of computer screens are rising.’ The Managing Director must decide whether BFF ought to raise its prices.

Oct/Nov 2019

Kemala produces beauty products of high quality. Demand for her best-selling hand cream is price inelastic. She promotes her products in specialist beauty magazines. Kemala is studying her income statement. An extract is given in Table 2.1. She said: ‘When I started my business, I did not understand why cash is important’.

Oct/Nov 2022