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Financial Report || FITNESS VENTURE - 2023 Evaluate the financial performance across three key business lines: Sports Equipment, Sportswear, and Nutrition & Food Supplements. Report created by : Jesse Ekanem

Key Focus Areas:

• Income Statement Review: Analyze revenues, expenses, and net income.
• Profit Margins Assessment: Examine gross, operating, and net profit margins.
• EBIT Margin Analysis: Assess Earnings Before Interest and Taxes (EBIT) for operational efficiency.
• Operating Expenses Ratio (OPEX): Determine operating expenses as a percentage of revenue.

Month  Business Line 

All  All 

Operating Expenses (OPEX): With an operating cost margin of 31.9% indicates that the operating expenses consume nearly one-
third of the revenue, which further suggests a high reasonable proportion of revenue is allocated to operational costs,
This is how much revenue generated for 2023... The expenses incurred against Revenue being A Net Margin percentage of 24.6% was
generated...indicates a healthy level of profitability. but focusing on cost efficiency could improve overall profitability. Business Line distributions
generated for 2023...
However.... (OPEX).
$15.83M $12.05M $3.78M Expense subgroup Opex scale M-o-M %

$17.56M $13.25M


$4.31M
PM revenue

$5.60M
PM expenses
PM net profit Payroll $1,790,000 9.28%
10.93% 9.95% 24.6% Equipment $1,333,000 10.26%
Total revenue generated M-o-M % revenue Total expenses incurred M-o-M % expenses Total Net Profit generated Net Margin Marketing $1,055,000 12.83%
10.59% 68.08% Rent $745,000 10.53%
The Nutrition and Food Supplements division R&D $540,000 9.09%
Drill down on revenue generated across Business Which Business line has the most expenses M-o-M % OPEX
experienced a substantial loss due to expenses Other $141,800 21.20%
Line... incurred in compare to revenue generated? OPEX margin
surpassing revenues.

Business Line Revenue's Business Line Expenses Business Line Total Profit Profit %
  
Sports equipment $8,908,500 $6,618,300 Sportswear $2,736,800 40.2%
Sports equipment
Sportswear $6,807,700 $4,070,900 Sports equipment $2,290,200 25.7%
Sportswear
Nutrition and Food Supplements $1,843,620 $2,556,500 Nutrition and Food Supplements ($712,880) -38.7%
Nutrition and Food Supplements

...and the trends of revenue (2023)... ...and the trends of expenses (2023)... ...and the trends of Net Profit (2023)... Gross Profit EBIT COGS Interest & Tax

$10.85M $5.24M $6.71M $929.40K

Consulting &
Gross Margin Other Income Total Sales
Professional Service

61.78% $966.19K $13.78M $2.82M

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Cash Flow Trend (2023) || Revenue & Expenses & Profit (Currency in USD) || Yearly & Quarterly Review. Profits. Revenue. Expenses. COGS distributions across Subgroup expenses... This is how the revenue and expenses splits by
departments over the year (2023)...

Overall Performance: The organization is facing challenges with maintaining profitability due to rising expenses and fluctuating revenue. Improving cost
Expense subgroup COGS scale
management and developing strategies to stabilize or increase revenue can help improve overall performance. It’s also beneficial to conduct a more detailed  Sales $14M
analysis of specific cost drivers and revenue sources to make informed strategic decisions. Labor $4,492,000.00
Materials $1,065,000.00 Consulting and professional services $3M
Sales $447,000.00 Other income $1M
Q1 review Q2 review Q3 review Q4 review Shipping $345,600.00
Opex ($6M)
50% 35% 15% 50% 37% 13% 50% 42% 8% 50% 38% 12% Other $263,700.00
Packaging $98,200.00 COGS ($7M)
Rev. Exp. Profit Rev. Exp. Profit Rev. Exp. Profit Rev. Exp. Profit
$4.83M $3.35M $1.48M $4.57M $3.42M $1.15M $3.83M $3.18M $0.65M $4.33M $3.29M $1.04M

$92K | 8%
$193K | 17% $210K | 16% Month Revenue Net △M-o-M % △ scales
$289K | 21% $269K | 21% $295K | 22%
$303K | 23% $1,949,000
January
February $1,567,700 -19.56%
$479K | 31% $468K | 28% $493K | 29%
$531K | 31% March $1,313,350 -16.22%
April $1,156,100 -11.97%
$695K | 36%
May $1,698,500 46.92%
June $1,719,200 1.22%
July $1,400,050 -18.56%
August $1,304,850 -6.80%
September $1,120,890 -14.10%
October $1,322,475 17.98%
November $1,277,530 -3.40%
December $1,730,175 35.43%

$1.9M $1.6M $1.3M $1.2M $1.7M $1.7M $1.4M $1.3M $1.1M $1.3M $1.3M $1.7M

$1.25M $1.09M $1.01M $0.96M $1.23M $1.23M $1.11M $1.04M $1.03M $1.03M $1.07M $1.20M

With total sales of $13.78M and operating expenses of $5.6M, the operating cost margin is around 40.6%. This higher percentage
indicates that a significant portion of revenue is spent on operating costs, suggesting an urgent need to explore strategies to reduce
operational expenses in order to enhance profitability and operational efficiency.

Sales Revenue COGS Opex Profit Profit (%) EBIT


Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan $1.36M $1.95M $0.66M $0.48M $0.69M 35.6% $0.81M
Feb $1.20M $1.57M $0.51M $0.48M $0.48M 30.5% $0.58M
Mar $1.05M $1.31M $0.51M $0.42M $0.30M 23.0% $0.38M
Apr $0.89M $1.16M $0.48M $0.42M $0.19M 16.7% $0.25M
Revenue : Expenses: Net Profit: May $1.30M $1.70M $0.64M $0.50M $0.47M 27.5% $0.55M
Expenses are rising as a percentage of revenue, peaking The decline in net profit percentage suggests that while Jun $1.33M $1.72M $0.63M $0.50M $0.49M 28.7% $0.58M
There is a need to focus on revenue growth strategies
in Q3. Consider evaluating cost control measures and revenue and expenses are fluctuating, profitability is Jul $1.16M $1.40M $0.58M $0.46M $0.29M 20.6% $0.36M
since there is a noticeable decline from Q1 to Q3.
improving operational efficiencies to reduce the getting squeezed. Efforts should be made to improve
Aug $1.05M $1.30M $0.55M $0.44M $0.27M 20.6% $0.32M
Ensuring consistent or growing revenue streams can
expense ratio. Analyzing which costs are increasing and Sep $0.93M $1.12M $0.54M $0.44M $0.09M 8.2% $0.14M
help stabilize profit margins. profit margins, possibly through cost reduction or
why could uncover areas for potential savings. Oct $1.08M $1.32M $0.52M $0.44M $0.30M 22.3% $0.36M
pricing strategies. Nov $1.07M $1.28M $0.54M $0.48M $0.21M 16.4% $0.26M
Dec $1.36M $1.73M $0.55M $0.54M $0.53M 30.7% $0.64M

Sports Equipment's Sportwear's

Revenue Leader : This category leads in revenue with $8.9 Nutrition & Food Sup.
High-Performing Revenue Driver : : With a revenue Declining Profitability : Although this segment realizes a gross
million, although it has a gross profit margin of 58.76% and a generation of $6.8 million, this segment demonstrates a profit margin of 44.82%, it is experiencing a Net loss of -38.67%.
Total Revenue net profit margin of 25.71%. Despite its lower profitability Total Revenue robust gross profit margin of 70.33% and a solid net profit Total Revenue This significant negative net margin suggests that operational
$8.91M
margins compared to other segments, its revenue potential
continues to be strong.
$6.81M margin of 40.20%, positioning it as the top-performing
$1.84M expenses are substantially undermining overall profitability.
category within the portfolio.
Total expenses Total expenses
Total Expenses
$6.62M 71.56% 58.76% $5.23M 25.7% $4.07M 75.38% 70.33% $4.79M 40.2%
$2.56M
Opex Margin Gross Margin Gross Profit Gross Profit Net Margin 24.32% 44.82% $826.32K -38.7%
Net Margin Opex Margin Gross Margin
Net Profit Net Profit Opex Margin Gross Margin Gross Profit Net Margin
Net Profit
$2.29M $2.74M ($712.88K)

More Focus on the profitable lines Sports Equipment and Sportswear lines Proper reviewing the cost structure for
(Sports Equipment and Sportswear) are driving profitability, while Nutrition & Nutrition & Food Supplements could
could sustain or increase overall Food Supplements need strategic help in identifying areas for cost
business profitability. improvements to reduce losses. reduction or efficiency improvements.

Operations Revenue Expenses Profit Operations Revenue Expenses Profit Operations Revenue Expenses Profit
COGS $3,674,200 ($3,674,200) COGS $2,020,000 ($2,020,000) COGS $1,017,300 ($1,017,300)
Consulting and professional $1,390,500 $1,390,500 Consulting and professional $1,170,000 $1,170,000 Consulting and professional $256,500 $256,500
services services services
Interest and tax $410,500 ($410,500) Interest and tax $374,900 ($374,900) Interest and tax $144,000 ($144,000)
Opex $2,533,600 ($2,533,600) Opex $1,676,000 ($1,676,000) Opex $1,395,200 ($1,395,200)
Other income $378,000 $378,000 Other income $532,600 $532,600 Other income $55,590 $55,590
Sales $7,140,000 $7,140,000 Sales $5,105,100 $5,105,100 Sales $1,531,530 $1,531,530
Total $8,908,500 $6,618,300 $2,290,200 Total $6,807,700 $4,070,900 $2,736,800 Total $1,843,620 $2,556,500 ($712,880)

REVENUE Qtr 1 Qtr 2 Qtr 3 Qtr 4 Quarterly Net Profit Business Line Net Profit
Consulting and professional services $982,500 $763,500 $517,500 $553,500
$2.74M
Other income $240,600 $296,500 $167,090 $262,000 $2.29M

Sales $3,606,950 $3,513,800 $3,141,200 $3,514,680

TOTAL REVENUE $4,830,050 $4,573,800 $3,825,790 $4,330,180

COGS Qtr 1 Qtr 2 Qtr 3 Qtr 4

Labor $1,035,000 $1,203,000 $1,174,000 $1,080,000
Materials $274,000 $283,000 $283,000 $225,000
Other $64,200 $67,800 $66,900 $64,800
($0.71M)
Packaging $27,600 $25,300 $18,600 $26,700
Sportswear Sports Nutrition and
Sales $102,700 $115,700 $75,000 $153,600 equipment Food
Supplements
Shipping $179,600 $64,600 $46,200 $55,200
TOTAL COGS $1,683,100 $1,759,400 $1,663,700 $1,605,300
CHALLENGES / INSIGHTS

OPERATING EXPENSES Qtr 1 Qtr 2 Qtr 3 Qtr 4

1. Negative Net Profit Margin for Nutrition & Food Supplements: The segment's negative net
Equipment $279,000 $328,600 $353,400 $372,000 profit margin of -38.67% reflects substantial profitability challenges and financial strain.
2. Low Gross Profit Margin for Nutrition & Food Supplements ; With a gross profit margin of
Marketing $305,000 $305,000 $195,000 $250,000
44.82%, this segment shows inefficiencies in converting sales revenue into gross profit.
Other $45,700 $31,000 $21,700 $43,400 3. High Cost of Goods Sold (COGS) for Sports Equipment: The $3.7 million COGS significantly
impacts the gross profit margin, indicating potential issues with cost management in this
Payroll $456,000 $456,000 $432,000 $446,000 category.
R&D $135,000 $135,000 $135,000 $135,000 4. High Labor Costs as a Percentage of COGS: Labor costs account for 66.93% of the $4.49
million COGS, which is notably high and negatively affects both gross and net profit
Rent $162,000 $171,000 $199,000 $213,000 margins.
TOTAL OPEX $1,382,700 $1,426,600 $1,336,100 $1,459,400 5. High Operating Expenses: Elevated operating costs in the Sports Equipment and Nutrition
& Food Supplements segments are adversely affecting overall profitability.

GROSS PROFIT Qtr 1 Qtr 2 Qtr 3 Qtr 4

COGS ($1,683,100) ($1,759,400) ($1,663,700) ($1,605,300)
Consulting and professional services $982,500 $763,500 $517,500 $553,500
Other income $240,600 $296,500 $167,090 $262,000 RECOMMENDATION / SOLUTIONS

Sales $3,606,950 $3,513,800 $3,141,200 $3,514,680 1. Implement Cost-Control Measures: Focus on reducing overall operating expenses
through cost-control and efficiency improvements.
TOTAL REVENUE $3,146,950 $2,814,400 $2,162,090 $2,724,880 2. Address Profitability Issues: Improve profitability by cutting costs, enhancing operations,
and exploring new revenue opportunities.
3. Boost Gross Profit Margin: Increase profitability by adjusting sales prices, lowering
M-o-M OPEX % Qtr 1 Qtr 2 Qtr 3 Qtr 4 production costs, or optimizing the product mix.
4. Reduce COGS: Implement strategies to lower the cost of goods sold for Sports Equipment
43.82% 5.93% -4.37% 7.10%
by negotiating better terms and improving production efficiency.
5. Revise Sales Strategies for Nutrition & Food Supplements: Reevaluate and enhance
NET PROFIT % Qtr 1 Qtr 2 Qtr 3 Qtr 4 strategies to improve sales and financial performance in this segment.
6. Invest in Automation and Marketing: Introduce automation to reduce labor costs and
30.6% 25.2% 17.0% 23.9%
increase investments in strategic marketing to drive revenue growth.
7. Revisit Business Processes and Marketing Strategies: Urgently re-evaluate and re-
EBIT Qtr 1 Qtr 2 Qtr 3 Qtr 4
strategize business processes and marketing approaches to enhance overall profitability.
$1,764,250 $1,387,800 $825,990 $1,265,480