Question
The popularity of Sketchers' products has increased significantly in recent years.Sales increased from $1,560.3 million in 2012 to $2,377.6 million in 2014, for an increase
The popularity of Sketchers' products has increased significantly in recent years.Sales increased from $1,560.3 million in 2012 to $2,377.6 million in 2014, for an increase in 52.4 percent. In the same period, operating income increased from $22.3 million to $209.0 million, for an increase of 83.7 percent. It should be noted that this growth was not the result of larger acquisitions of or mergers with other companies. Write a memorandum that explains how 5 percent increase in sales could cause an 83.7 percent increase in profit. Your memo should address the following: a) An identification of the accounting concept involved b) A discussion of how various major types of costs incurred by Sketchers were likely affected by the increase in sales. c) The effect of the increase in sales on Sketchers' margin of safety
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