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Chapter 5 Evaluating Operating and Finakil Performance 191 MINICASE Scandi Home Furnishings, Inc Kaj Rasmussen founded Scandi Home Furnishings as a corporation during mid 2013 Sales during the fiest full year (2014 of operation reached $1.3 milion Sales increased by 15 pencent in 2015 and another 20 percent in 2016 However aher ncreasing in 2015 over 2014, profits fel sharply in 2016, causing Kaj to wonder what was happening to his "pride-an joy business venture After all, Kaj worked as closely as possible to a 24/7 pace, beginning with the startup of Scan and continuing through the first three full years of openation Scandi Home Furnishings, located in eastern North Cardlina, designs, manufactures, and sels Scandinaviandesigned fumiture and accessories to home fumishings retailers. The modem Scandinavian design has a streamlined and unclut ered look While this furniture style is primanily associated with Denmark both Norwegian and Swedish designes ha contributed to the allure of Scandinavian home furnishings. Some say that the inspiration for the Scandinavian design can be traced to the elegant ourves of art nouweau from which designers were able to produce aesthetically pleasing structurally strong modern furniture Danish fumishings and the home fumishings produced by other Scandinavan contres-Swede, Norwaard Finad- made using wood primarily oak, maple, ad ashL alumnum steel and high-grade plastics Kaj grew up in Copenhagen, Denmark, and neceived an undergraduane degree from a sechnicall university in Sweden As is typical in Europe, Kaj began his business career as an apprentice at a major home furnishings manufacturer in Copenhagen. After learning the trade, he quickly moved into a management position in the firm. However, ater a few years, Kaj realined that what he nealy wanted to do was to start and operate his own Scandinavian home fumishings business. At the same time after travelling throughout the world, he was sure that he wanted to be an entrepreneur i the United States. Kai moved to the United States in early 2013. With $140,000 of his personal assets and $210,000 from venture investors, he began operations in mid-2013 Kaj, with a 40 percent ownership interest and industryelat management expertise, was allowed to operate the venture in a way that he thought was best for Scand Four years later, Kaj is sure he did the right thing following are the thee years of income statements and balance sheets for Scandi Home Furmishings Kaj felt that he would need to continue to expand sales to maintain a competitive advantage After first concentrating on selling Scandinavian home furnishings in the Northeast in 2014 and 2015, he decided to enter the West Coast market. Ani ease in expenses occumed associated with idenbifying, contacting, and selling to home fumishings retailers in Califomia Oregon, and Washington Kaj Rasmussen hopes that you can help him btter understand what has been happening t Scandi Home Fumishings from both operating and financial standpoints SCANDI HOME FURNISHINGS, INC NCOME STATEMENTS Net sales ost of goods sold 2014 2015 1,300,000 1,500 000 S1 Gross proft 30 000 Geral and administarive amings betore tae (continued on next page Chapter 5 Evaluating Operating and Finakil Performance 191 MINICASE Scandi Home Furnishings, Inc Kaj Rasmussen founded Scandi Home Furnishings as a corporation during mid 2013 Sales during the fiest full year (2014 of operation reached $1.3 milion Sales increased by 15 pencent in 2015 and another 20 percent in 2016 However aher ncreasing in 2015 over 2014, profits fel sharply in 2016, causing Kaj to wonder what was happening to his "pride-an joy business venture After all, Kaj worked as closely as possible to a 24/7 pace, beginning with the startup of Scan and continuing through the first three full years of openation Scandi Home Furnishings, located in eastern North Cardlina, designs, manufactures, and sels Scandinaviandesigned fumiture and accessories to home fumishings retailers. The modem Scandinavian design has a streamlined and unclut ered look While this furniture style is primanily associated with Denmark both Norwegian and Swedish designes ha contributed to the allure of Scandinavian home furnishings. Some say that the inspiration for the Scandinavian design can be traced to the elegant ourves of art nouweau from which designers were able to produce aesthetically pleasing structurally strong modern furniture Danish fumishings and the home fumishings produced by other Scandinavan contres-Swede, Norwaard Finad- made using wood primarily oak, maple, ad ashL alumnum steel and high-grade plastics Kaj grew up in Copenhagen, Denmark, and neceived an undergraduane degree from a sechnicall university in Sweden As is typical in Europe, Kaj began his business career as an apprentice at a major home furnishings manufacturer in Copenhagen. After learning the trade, he quickly moved into a management position in the firm. However, ater a few years, Kaj realined that what he nealy wanted to do was to start and operate his own Scandinavian home fumishings business. At the same time after travelling throughout the world, he was sure that he wanted to be an entrepreneur i the United States. Kai moved to the United States in early 2013. With $140,000 of his personal assets and $210,000 from venture investors, he began operations in mid-2013 Kaj, with a 40 percent ownership interest and industryelat management expertise, was allowed to operate the venture in a way that he thought was best for Scand Four years later, Kaj is sure he did the right thing following are the thee years of income statements and balance sheets for Scandi Home Furmishings Kaj felt that he would need to continue to expand sales to maintain a competitive advantage After first concentrating on selling Scandinavian home furnishings in the Northeast in 2014 and 2015, he decided to enter the West Coast market. Ani ease in expenses occumed associated with idenbifying, contacting, and selling to home fumishings retailers in Califomia Oregon, and Washington Kaj Rasmussen hopes that you can help him btter understand what has been happening t Scandi Home Fumishings from both operating and financial standpoints SCANDI HOME FURNISHINGS, INC NCOME STATEMENTS Net sales ost of goods sold 2014 2015 1,300,000 1,500 000 S1 Gross proft 30 000 Geral and administarive amings betore tae (continued on next page