- 15 Marks
MA – L2 – Q69 – Performance Analysis
Evaluate the performance of XYZ Group's three product segments using financial data and an analytical model.
Question
It is now the end of Year 2. XYZ Group has three divisions, each producing and selling a different group of products. Information about the financial performance of each division/product group is as follows.
| Segment A | Year 1 | Year 2 | Year 3 (forecast) |
|---|---|---|---|
| GH¢000 | GH¢000 | GH¢000 | |
| Sales | 8,000 | 8,323 | 8,741 |
| Cost of sales | 4,400 | 4,520 | 4,610 |
| Gross profit | 3,600 | 3,803 | 4,131 |
| Transport costs | 400 | 415 | 430 |
| R&D expenditure | low | low | Low |
| Market share | 11% | 10% | 8% |
| Sales volume index | 100 | 102 | 104 |
| Segment B | Year 1 | Year 2 | Year 3 (forecast) |
|---|---|---|---|
| GH¢000 | GH¢000 | GH¢000 | |
| Sales | 10,000 | 11,220 | 12,600 |
| Cost of sales | 6,000 | 6,480 | 7,000 |
| Gross profit | 4,000 | 4,740 | 5,600 |
| Transport costs | 350 | 390 | 450 |
| R&D expenditure | high | high | high |
| Market share | 27% | 27% | 27% |
| Sales volume index | 100 | 110 | 121 |
| Segment C | Year 1 | Year 2 | Year 3 (forecast) |
|---|---|---|---|
| GH¢000 | GH¢000 | GH¢000 | |
| Sales | 6,000 | 5,600 | 5,400 |
| Cost of sales | 3,900 | 4,080 | 4,210 |
| Gross profit | 2,100 | 1,520 | 1,190 |
| Transport costs | 360 | 476 | 540 |
| R&D expenditure | medium | medium | medium |
| Market share | 20% | 20% | 20% |
| Sales volume index | 100 | 107 | 114 |
Required:
Use this information to evaluate the performance of the three product groups. You should try to use an analytical model to support your financial analysis.
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