Need help to answer minicase from A-G Ch. 5 Entrepreneurial Finance

Chaper 5: Evauxing Operating and Financial Perfommance MINICASE Scandi Home Furnishings, Inc. Kaj Rasmussen founded Scandi Home Fumishings as a corporation during mid-2013 Sales during the first full year (2014) of operation reached $1.3 million Sales increased by 15 percent in 2015 and another 20 percent in 2016. However, aite increasing in 2015 over 2014 profits fall sharply in 2016, causing Kaj to wonder what was happening to his "pride-and pf business verture. After all, Kal worked as dosely as possible to a 24/7 pace, b nning with the startup of Scani and continuing through the first three full years of operation Scandi Home Fumishings, located in eastern North Carolina, designs, manufactures, and sells Scandinavian-designed fumiture and accessories to home fumishings retailers. The modern Scandinavian design has a streamlined and unclut ered look. While this fumiture style is primarily associated with Denmark, both Norwegian and Swedish designers have contributed to the alure of Scandinavian home fumishings Some say that the inspiration for the Scandinavian design can be raced to the elegant curves of art nouveau from which designers were able to produce aesthetically pleasing structurally strong modem fumiture Danish funishings and the home fumishings producead by other Scandinavian countries Sweden, Norway, and Finland-are made using wood (primarily oak, maple, and ashl, aluminum, steel, and tigh-grade plastics Kaj grew up in Copenhagen, Denmark and received an undengraduate degree from a technical university in Sweden typical in Europe, Kaj began his business career as an apprentice at a major home furnishings manufacturer Copenhagen After leaming the trade, he quickly moved into a management position in the fim. However, after a years, Kaj realized that what he really wanted to do was to start and operae his own Scandnavian home funishings business. At the same ime, afer travelling throughout the world, he was sure that he wamed to be an entrepreneur in the united States Kaj moed to the United States in ear1 2013. With $140,000 of his personal assets and $210, from venture nvestors, he began opesrations in mid-2013. Kaj, with a 40 percent ownership erest and industry-related management expertise, was allowed to cperate the venture in a way that he thought was best tor Scandi Four years later, Kaj is sure he cid the right thing Folowing ae the three years of income statements and balance sheets for Scand Home Fumishings. Kaj felt that he nould need to ortiu to expand sales mantan a competitive advantage. Ater tirst coc enfating on selling Scandnavian home furnishings in the Northeast in 2014 and 2015, he decided to enter the West Coast market. An in crease in expenses occurred associated with identifying, contacting, and selling to home furnishings retalers in Caifornia, Dregon, and Washington Kaj Rasmussen hopes that you can help him better understand what has been happening to Scandi Home Fumishings from both operating and financial standpoints SCANDI HOME FURNISHINGS, INC. INCOME STATEMENTS Met sales Cost of goods so 2015 1,3010m 1,811 0 90000 1.280000 Gruss proli 500,000 5D000 50000 Ganeral and adminstaave Depred 57000m 7 010 5 93.000 6000 114.0 ash Diidens (continued on next page)