Question 2 (30 marks) GM Stores is a retail company that specialises in selling household and electronic goods. GM Stores also started offering cloud computing services and has invested a lot in these technologies in recent years. Cloud computing is a service where customers store data on the web as opposed to storing them in their personal computers. It has the advantage that customers are likely not lose their information should their computers crash GM also offers VIP membership to customers who prefer faster deliveries when they order. The membership fee is N$40 per year. Most of the logistics for the company are done in house. Since last year there has been a 20% growth in electronic goods demand in general owing to the pandemic and lock downs requiring people to stay at home most of the times. On average, other companies in the cloud computing sphere have recorded growth rates of about 50% and gross profit margins of about 80% in the past year. GM stores operates in a market that is highly price competitive and have successfully manage to keep their price stable over the years. This has been facilitated by its ability to source household goods from South Korea where labour costs are considered low. You have been provided with the financial information for GM Stores for the past two years as follows: Notes 31-Dec-20 31-Dec-19 N$000 N$000 Revenue 1 82 320 94 660 Cost of sales (54 531) (51 708) Gross profit 40 129 30 612 2 You have been provided with the financial information for GM Stores for the past two years as follows: Notes 31-Dec-20 31-Dec-19 N$000 N$000 Revenue 1 94 660 82 320 Cost of sales 2 (54 531) (51 708) Gross profit 40 129 30 612 Administration costs 3 (2 760) (1 720) Distribution costs (13 420) (13 180) Other operating costs (140) (110) Net profit 23 809 15 602 Notes: 1. Break down of revenue Household goods Electronic goods Cloud computing services VIP membership fees 31-Dec-20 N$000 38 990 41 870 12 400 1 400 94 660 31-Dec-19 N$000 41 160 32 640 6 520 2 000 82 320 Notes: 1. Break down of revenue Household goods Electronic goods Cloud computing services VIP membership fees 31-Dec-20 N$000 38 990 41 870 12 400 1 400 94 660 31-Dec-19 N$000 41 160 32 640 6 520 2 000 82 320 2. Break down of cost of sales Household goods Electronic goods Cloud computing services VIP membership fees 31-Dec-20 N$000 23 394 26 797 4 240 100 54 531 31-Dec-19 N$000 28 812 21 216 1 580 100 51 708 3. Administration The cost of running the customer services department is included in the administration costs above. This is a department works with disgruntled customers. The costs of customer service was N$860 000 in 2019 and N$1 900 000 in 2020. 4. Non-Financial data 31-Dec-20 31-Dec-19 Percentage of orders delivered on time 74% 92% 320 Number of customer complaints 1 400 000 000 Number of customers 7 100 000 6 500 000 Percentage of late VIP members delivery 14% 2% Required: Marks Sub- total Total Assess the performance of GM Store for the year ended 31 December 2020. Your answer should include both financial and non-financial measures of performance. You will be marked as follows: Calculations - 15 marks Discussion and application 15 marks Total 30 30 30