1. Write a two-to three-page document that includes the problem that was assigned to you and an outline of your solutions to the problems

Dog-Ann is a pet supplies company serving in Midwest. It sells pet supplies and provides pet grooming and training services. Table 1 shows the income statement of Dog-Ann for the previous year. Sales Cost of Goods Fixed Assets Variable Expenses Fixed Expenses Inventory Accounts Receivable Other Current Assets $250,000 $150,000 $105,000 $25,000 $35,000 $10,000 $5,000 $5,000 a) Develop the strategic profit model of this organization and draw the diagram. b) What is the firm's profit margin? c) What is the firm's ROA Suppose the firm undertakes a supply chain improvement project. It improves its service level to customers by opening more warehouses which means it will be able to deliver more quickly to customers. The result is a 10% increase in sales. Assume cost of goods sold increases by 6%. The new warehouse requires additional new asset investment of $40,000. Fixed expenses increase by $1,000 because of the expense of operating the warehouses. Assume other variables do not change. Answer the following three questions based on this information. d) Show the new strategic profit model. e) What is the new asset turnover? f) What is the firm's new return on assets? Old Model 1 1 Sales $250,000 2 Cost of Goods $150,000 ROE = Strategic Profit Model Proft Margin Asset Turnover *Equity Multiplier 3 Fixed Assets $105,000 = 16%*2*1 4 Variable Expenses $25,000 32% 5 Fixed Expenses $35,000 6 Inventory $10,000 7 Accounts Receivable $5,000 00 Other Current Assets $5,000 9 Profit (1-2-4-5) $40,000 16% 10 Profit Margin = Profit/Sales 11 2 Asset Turnover = Ttotal Revenue / Total 11 2. Asset Turnover = Ttotal Revenue / Total Assets (Fixed asset+ Inventory + Current Assets+ Receivable 12 Equity Multiplier 1 1 New Model 1 1 Sales $275,000 ROE * 11 10% Strategic higher Profit Model Proft Margin Asset Turnover *Equity Multiplier N Cost of Goods $159,000 II 20*1.66*1 6% higher 3 3 Fixed Assets $145,000 33% 4. Variable Expenses $25,000 5 5 Fixed Expenses $36,000 6 Inventory $10,000 7 Accounts Receivable $5,000 8 Other Current Assets $5,000 9 Profit (1-2-4-5) $55,000 20% 10 Profit Margin = Profit/Sales 11 1.666666667 Asset Turnover = Ttotal Revenue / Total Assets (Fixed asset+ 12 Equity Multiplier 1