ABC Pet Supply is a local neighborhood boutique that caters to weal

thy pet owners in the town. The store$$s annual sales last year were $$750,000.$ The owner spent $$350,000$ to buy inventory and had $$300,000$ of expenses including rent, utilities, staff costs, etc.

What was the gross margin for the year in dollars and percentage?

What was the owner$$s net profit for the year?

Upon doing a SWOT analysis, the owner realizes her prices average $10\%$ higher than the prices of the same products at the Petco which is at a large strip center about three miles away.

What would her new gross margin dollars and gross margin percentage be if she lowered her prices by $10\%$ to match the competition and her sales in units stayed the same? Note $$ if prices go down by $10\%$ and unit sales stay the same, sales $ will go down by $10\%!$

If sales do not change because of the price reduction, how will this decision affect her net profit?

By how much, in dollars and percentage, must sales $ increase for the owner to maintain her profit?

By what percentage must unit sales increase for her to maintain her net profit?

Based on the consumer buying process, do you think the owner should reduce prices to match the big box competitor? Why?

The owner of a women$$s specialty clothing store is having trouble filling all the fixtures in her store with merchandise because she does not have extra cash to purchase more inventory. She is doing $$500,000$ in annual sales, she is spending $$250,000$ per year to buy inventory, and her inventory turns are $3\mathrm{.}0$ times per year. She is confident that if she had another $$100,000$ to invest in inventory, she could achieve the same inventory turn and gross margin percentage.

What are her gross margin percentage and gross margin dollars now?

How much is the value of inventory that$$s in her store right now?

How much extra profit would she generate if she did invest another $$100,000$ in inventory?

Assuming the cost of borrowing the $$100,000$ is $10\%,$ should she borrow the money?

What are the risks associated with pursuing this growth strategy?

The owner of a local restaurant has been given an opportunity by his landlord to expand into an adjacent smaller space that was vacated by another store that went out of business. He pays $$500,000$ per year in rent for his current space, and the new space would be an additional $$300,000.$ The restaurant generates $$2,000,000$ in annual sales, wholesale cost of food is $$500,000,$ and expenses for supplies, staff, cleaning, etc. are $$800,000.$ He is confident he can add $$500,000$ per year to sales with only a $$100,000$ increase in expenses other than rent.

What will the additional wholesale food costs be on the extra $$500,000$ of sales?

If he took the deal, what would the impact be on his net profit?

What rent would he be able to pay for the new space if he wanted to increase his net profit by at least $20\%$ or $$40,000?$