The ABC company has been in business for over 40 years. Sales has been consistent for the last 10 years at $2.0m annually. In addition, the Gross margin has been consistent at 60%. Costs were all consistent: Warehouse costs $150,000, Transportation $350,000, ICC, $150,000 and Other Costs $300,000. Taxes $50,000 and Interest at $50,000. The Assets were: Cash $220,000, A/R $140,000, Inventory $350,000 , Fixed Assets $1,080,000. Liabilities were Current $600,000, Long Term $840,000. Last year the company made a number of changes in the distribution of the product to their customers. This included adding a warehouse and eliminating some 3rd party warehousing.

Here is the email you received from the accountant:

Greetings,

I'm very busy with tax season but here is some information you will need: Sales this last year were $2,250,000 and COGS were $900,500. The sale of our Cincinnati warehouse increased LT assets by $200,000 to $1,280,000 and new warehouse costs are $328,000. The reduction mileage and delivery times to the customers decreased our transportation costs to $120,000. Inventory carrying costs are $180,000. Other costs to the organization are $440,000. Combined Taxes and Interest were same at $100,000 ($50,000 each). I haven't had a chance to check the profit levels. Total Current Assets are $650,000, Current Liabilities are $400,000. The purchase of the asset resulted in Long Term Liabilities increasing to $1,040,000. Anyways very busy got to go.

Saheed

You have been tasked by the owner to do a SPM analysis of this change and determine whether or not it was successful. What ratios and margins should be considered?