You work for a global shoe company called Shoes & Co$,$ and you are required to analyse the

impact of the current supply chain design. Use the strategic profit model to perform the required

analysis.

The company$$s financials are provided below with a $20\%$ corporate tax rate. Answer the following

questions:

$1\mathrm{.}1$ Indicate by how much Logistics Expenses must decrease to achieve a ROA of $32\%.$

$(15)$

$1\mathrm{.}2$ Inventory holds up working capital for an organisation, you believe by reducing inventory by

$20\%$ would be even more beneficial at improving the $32\%$ ROA. Illustrate this in the SPM

$(15)$

$1\mathrm{.}3$ Analyse findings in $1\mathrm{.}1$ and $1\mathrm{.}2(10)$

SHOES AND CO $($PTY$)$ LTD

STATEMENT OF PROFIT & LOSS FOR THE YEAR

ENDED $31$ DECEMBER $2022$

SALES

$299,990$

COST OF SALES

$179,990$

GROSS PROFIT

$120,000$

TRANSPORTATION

$29,993$

WAREHOUSE COSTS

$7,993$

INVENTORY CARRYING COSTS

$3,993$

OTHER OPERATING COSTS

$14,993$

TOTAL OPERATING COSTS

$56,972$

Earnings before interest & Tax

$63,028$

Interest

$3,000$

Taxes

$9,004$

Net Income

$51,024$

Assets

Cash $185,000$

Account Recivables $130,000$

Inventory $45,000$

Total current assets $360,000$

Net fixed assets $140,000$

Total assets $500,000$

Liabilities

Current Liabilities $65,000$

Long$-$term debt $35,000$

Total liabilites $100,000$

Sharholder equity $400,000$

Total liabilites & equity $500,000$