Q22

TIES CO

a)Financial performance assesment

Sales

The sales increase by 62%in q2,it may be possibe that customers wew attracted due to diffrent
varaietes of ties.either way despite the lack of experience and competive industry they managed
to increase the sale which is a good start of buissness.The good effort should continue for the
future success.

Gross profit

g.p margin in q1 was 52%(518400/420000)and it wa reduced to 50%in q2.the fall in g.p margin
can be explained by increase in cogs eg. ADV movement in currency exchange rate as they are
importing buissness.It may be possible that due to lack of experience they might not be able to
cost there products correctly.Either way the fall in g.p is not significant but should be considered
or noticed immediately for future bescuase industry is competitve

website development

the website cost is reduced by 25%(30000/120000)and this is a generic thing as on starting the
initial costs might be to purchase the domain and register the website and in q2 it may be due to
the general maintanince

Administration

the admin cost was 24%of sales in q1 and reduced to 22%in q2.the fixed element in
administration costwould have been due to the large volume and it appears they have tight
control over the variable administration expense they had performed well in this aspect and if
continue they are likely to recieve positive results in future

Distribution

it was approx 5% of sales in q1 and same in q2 .they had maintained control over distribution
costs and logistical cost might be constant and performance cannot be fairly judged in this
scenario.Better performance an be assesed in future periods or by comparing with industry.

Marketing

the initial high marketing cost was made in order to create the awarness of comapany,since its a
new start and the managment of the company are not intended to spend further since its a
discretionary cost .

Variable costs
it is 12% of sales in q1 and same in q2,it can be appreciated since the cost was not increased but
the fair performance would be assesed in later periods or by comparing with the industry

N.P

The np margin is 32% sales and in q2 it is 8% of sales.If they improve their strengths and
overcome their weakness they can achieve a breakeven or profit in future .

C)

Website hits

website hits was increased by 25% in q2.the web hits show positive indication or awarness
among pepole is increasing and the efforts made in the marketing in q1 paid off. if awarness is
likely to increase in the furture it can capture more market share.

Number of ties and conversion rate

# of ties sold was increased by 40% in q2 and the conversion rate was 4% in q1 and 4.5%in
q2,the company is performing well in both the quarters as compared with the industry avg
probably due to the quality of ties or the industry avg probably due to the quality of ties or diff
prices and style and quality pepole might be attracted towards them.this shows the competitive
advantage despite of having lack of experience

the timely delivery was reduced by 6% points in q2,generally speaking it is the customer
prefrence to recieve the product on time and due to late delivery customers may be dissatisfied
resulting in loss of reputation and sale.This needs to be investigated and resolved on urgent basis

sales return

the sales return was increase in q2 which is more than the avg industry showing the sign of
customer dissatisfaction it may be bescuase of diffrent colour shades in actual as compared with
display on website or sales return may be bescuase of late delivery.the root cause of this issue
should be investigated and resolved immidiately.

system downtime

the system downtime rate was increase in q2 which indicates poor website managment as the
website is not able to handle large traffic .this may also result in loss of potential sales.since this
is the basic source of running the buissness so it needs to be investigated and responded on top
priority to make website better in future