Kelley's Beauty Products Ltd. reported the figures below at December 31, 2017, 2016, and 2015. The business has declared bankruptcy. You have been asked to review the business and explain why it failed. (Click the icon to view financial information.) Requirement Evaluate the trend of Kelley's Beauty Products's results of operations during 2015 through 2017. Consider the trends of sales, gross profit, and net income. Track the gross profit percentage (to three decimal places) and the rate of inventory turnover (to one decimal place) in each year-2015, 2016 and 2017. Also, discuss the role that selling expenses must have played in Kelley's Beauty Products's difficulties. First, let's calculate Kelley's gross profit and gross profit percentage. (Enter the gross profit percentage as a decimal rounded to three decimal places. Enter all other values to one decimal place.) Dollars in thousands Sales Cost of sales 2017 2016 42 39.6 33.5 31.0 8.5 8.6 0.2020.217 2015 37.2 29.1 8.1 0.218 Gross profit Gross profit percentage Consider the trends of sales, gross profit, and net income. The sales increased , the gross profit dropped , and the net income slid to a net loss Consider the trends of sales, gross profit, and net income. The sales increased the gross profit dropped , and the net income slid to a net loss Now calculate the rate of inventory turnover. (Round the average calculation to two decimal places. Round your answer to one decimal place.) 2017 2016 2015 Inventory turnover . This suggests that Kelley's Beauty Products had to The gross profit percentage significantly while the rate of inventory turnover its merchandise more and more just to sell the goods. The end result was a v in 2017 Selling expenses significantly, which suggests that Kelley's Beauty Products had to advertise in order to sell its inventory. Financial information Sales .. ...... .......... Kelley's Beauty Products Ltd. Statement of Income For the Years Ended December 31, 2017, 2016, and 2015 Thousands 2017 2016 2015 $ 42.0 $ 39.6 $ 37.2 Cost of sales..................... 33.6 31.0 29.1 ......... 8.2 7.0 6.6 Other expenses 0.4 1.0 0.8 $ (0.2) $ Net income.(net lass). ......... 0.6 $ 0.7 Additional data: Ending inventory $ 9.1 $ 8.5 $ 7.5 Beginning inventory in 2015 was $6,600. Kelley's Beauty Products Ltd. reported the figures below at December 31, 2017, 2016, and 2015. The business has declared bankruptcy. You have been asked to review the business and explain why it failed. (Click the icon to view financial information.) Requirement Evaluate the trend of Kelley's Beauty Products's results of operations during 2015 through 2017. Consider the trends of sales, gross profit, and net income. Track the gross profit percentage (to three decimal places) and the rate of inventory turnover (to one decimal place) in each year-2015, 2016 and 2017. Also, discuss the role that selling expenses must have played in Kelley's Beauty Products's difficulties. First, let's calculate Kelley's gross profit and gross profit percentage. (Enter the gross profit percentage as a decimal rounded to three decimal places. Enter all other values to one decimal place.) Dollars in thousands Sales Cost of sales 2017 2016 42 39.6 33.5 31.0 8.5 8.6 0.2020.217 2015 37.2 29.1 8.1 0.218 Gross profit Gross profit percentage Consider the trends of sales, gross profit, and net income. The sales increased , the gross profit dropped , and the net income slid to a net loss Consider the trends of sales, gross profit, and net income. The sales increased the gross profit dropped , and the net income slid to a net loss Now calculate the rate of inventory turnover. (Round the average calculation to two decimal places. Round your answer to one decimal place.) 2017 2016 2015 Inventory turnover . This suggests that Kelley's Beauty Products had to The gross profit percentage significantly while the rate of inventory turnover its merchandise more and more just to sell the goods. The end result was a v in 2017 Selling expenses significantly, which suggests that Kelley's Beauty Products had to advertise in order to sell its inventory. Financial information Sales .. ...... .......... Kelley's Beauty Products Ltd. Statement of Income For the Years Ended December 31, 2017, 2016, and 2015 Thousands 2017 2016 2015 $ 42.0 $ 39.6 $ 37.2 Cost of sales..................... 33.6 31.0 29.1 ......... 8.2 7.0 6.6 Other expenses 0.4 1.0 0.8 $ (0.2) $ Net income.(net lass). ......... 0.6 $ 0.7 Additional data: Ending inventory $ 9.1 $ 8.5 $ 7.5 Beginning inventory in 2015 was $6,600
