Kamel Company is a chain of retail outlets selling closing, its sales have increased from $370 million to $780 million over the last five years. The company’s gross profit is currently 20% of sales, the mark-up on the cost of goods and retail store running costs is 25%. Corporate overhead is $22 million and the operating profit is $134 million.

The company’ finance director has produced a budget, which has been approved by the board of directors, to increase sales by 20% next year and to improve operating profit margin to 20% of sales. Corporate overheads will be contained at $25 million.

The strategy determined by the marketing director is to continue expanding its sales by winning market share from competitors and by increasing the volume of sales to existing customers. The company also intends to open new stores to extend its geographic coverage.

Star Company also plans to improve its cost effectiveness by continuing its investments in major regional warehouses and distribution facilities servicing its national network of stores, together with upgrading its information systems to reduce inventory and delivery lead times to its retail network.

Required:

Produce the relevant financial information for the senior management team to support the business strategy.

Identify any financial and non-financial details arising from the strategy that need to be addressed.