Essay upon Red Flags

Red Flag one particular

Although the earnings on snack food decreases every year, the cost of goods sold increases every year. The expense of these snacks purchased via vendors happen to be increasing as the prices they are sold for inside the gift store remain similar. The gift shop ought to raise the cost on the snack foods sold. As an alternative, the present shop may seek to purchase these snacks for less costly from one more vendor. Ultimately, the prices should be raised enough to cover the price to buy them produce a revenue.

Red Flag two

Some of the things in the present shop show up dusty and " shopworn. ” Even though this may in a roundabout way contribute to a decrease in sales, the consumers' perceptions of the shop might be affected. To get shop neat and tidy will help inside the overall appearance from the shop. Customers will see products more attractive and stay more prone to purchase these people.

Red Flag 3

In your examination of the economic statements, the thing is that there is a bank loan within the books. The typical balance of the loan can be $14, 000 at the beginning of the last year, and $10, 500 at the end from the prior season. The interest expense on the profits statement intended for the year is definitely $1, 560. Interest should be paid on any loan. The gift idea shop could elect to work with money in cost savings to spend the balance from the loan. This may eliminate the curiosity expense and contribute to the shop's savings. Alternatively, the store could find an additional bank using a lower interest rate for this. Paying out interest over a loan seems unlikely for any not-for-profit organization; however , in cases like this, the loan should be paid with the net income in the shop.

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