Below you will find three extracts from a Financial Times article titled “Profits fall 25%at UK’s biggest listed companies” published on 3 June 2013:
• “Profit at the UK’s largest quoted companies fell by one-quarter last year eventhough revenues rose slightly, as businesses suffered a severe margin squeezefrom higher costs they could not fully pass on to customers.”
• “Companies failed to pass on rising costs of all kinds to their customers, bothin terms of an increase in the purchase or production price of the items they selland in broader operating costs. […] It suggests that companies are finding thatthe costs of running their businesses are rising more quickly than any increasein sales.”
• “Companies’ scope for offsetting poor sales growth with cost-cutting is muted,because they have taken many cost reduction measures earlier in therecession.”
Analyze the information presented in the extracts above and explain in detail what theyare referring to by using a template income statement (exact figures are not required)and explaining the movements in revenue, costs and profit.