Reza has been recently promoted to the Chief Financial Officer role of Beach Gear Inc., following the sudden retirement of his long-time supervisor and mentor, Valerie. Reza, who has worked at the company since he graduated six years ago, has some ideas on how to improve the company, but is worried about making mistakes. After all, he doesnt come from an accounting and finance background and relied heavily on Valeries guidance in his previous role as Controller. Reza wants to get a detailed report from you, a talented group of MBA students, before he makes any major decisions. Predictably, Beach Gears sales are largely seasonal, with most of the years sales occurring over the spring and summer months. Beach Gear mostly sells locally in the BC area, through ongoing supply contracts with local vendors. It has also managed to secure a deal with an American chain with small shop down the western coast, from Washington state, through Oregon, and down to California. Supplying the chain accounts for about 15% of Beach Gears sales revenues. Last year, Beach Gear generated $2 million in sales in the March 1st to August 31st 6-month period. In the other months, sales totaled $500,000. Both numbers were an approximate 1.5% increase from the year before and a 2% increase from two years ago. Beach Gears biggest expenses are salary and supplies, which are used as inputs for manufacturing inventory. Typically, salaries amount to 26% of revenues while supplies total 22%. After the other expenses were taken into account, last years net profit totaled $990,000. This was a 5% increase over the previous year and a 5.5% increase from two years ago. Reza projects a 1% growth in revenues over