Suppose the firm with strategic profit model results above, reduces the number of warehouses for finished goods. This reduces fixed assets by $5,000, inventory by $1,000, and fixed expenses of warehouse operations by 1,000. Assume the only other item affected is variable expense which is reduced by the amount that inventory carrying cost goes down. The firm uses 25% as the inventory carrying cost percentage. What will the firms profit margin be?

SALES GROSS MARGIN300,000 STRATEGIC PROFIT MODEL 100,000 COST OF GOODS 200,000 VARIABLE EXPENSES 25,000 FIXED EXPENSES 35,000 INVENTORY 10,000 ACCOUNTS REC. PROFIT PROFIT MARGIN TOTAL EXPENSES SALES 60,000 RETURN ON ASSET SALES ASSET TURNOVER CURRENT ASSETS TOTAL ASSETS30, 30,000 10,000 FIXEDASSETS OTHER CURRENT 105,000 10,000