When looking at the income statement for your firm, you notice that your Cost of

When looking at the income statement for your firm, you notice that your Cost of Goods Sold was $1M in 2012, $1.2M in 2013 and $2M in 2014. How will you determine if there is an issue you should be worried about? What other types of financial statements might you look at to see if there is an issue and why?
respomd to my freinds with 100 words or more to each one
Hello class,
When looking at the income statement for your firm, and noticing that your cost of goods sold was 1M in 2012, 1.2M in 2013, and 2M in 2014, there are a number of things you should look into. The first thing you would want to check would be inventory cost. Due to inflation there could be a rise in the prices of inventory costs. Inventory costs rising, would mean that your cost of goods would increaser to become profitable. Another thing to look into would be employees. As a business owner you would want to make sure that you do not have too many employees, and that they are also doing a good job. You would not want the cost of goods to be increased because you are losing money because of bad employees. Another situation to look into would be machinery. You would want to check how much money you are paying per year to keep the machines running, or if they break down how much money you are spending in order to fix the machines. You could also look into a cheaper way to make a product. As long as the product is still good quality, it is important to cut costs as much as you can in order to keep the cost of goods down. The cheaper you are able to sell the product and still make money, the happier your customers will be.
and anotther 100 words to this one
Where you can find an issue with the cost of goods sold is reviewing the balance sheet or the cash flow to determine if the inventory is too extensive or if the company has a lot of money due an account payable. The issue lies within the company buying too much inventory and not selling enough inventory, which can affect the companies, profit, and net purchases, to check and see if the company is making revenue off the inventory. To determine the size of the inventory, the company should use the cost of goods sold formula to calculate the beginning and ending inventory. Once you get your inventory count, you’re going to multiply the amounts of units sold by the average amount of the unit costs that’s been sold to get the company’s average revenue on the inventory. We can use the gross profit formula to determine if we are making a good amount of profit off the inventory or if we are spending too much and not asking enough. Then, after checking the revenue, the company should use the inventory turnover ratio formula (cost of goods sold divided by average inventories) to be sure that the restocking and sales are balanced between four and six. Anything above or below would mean that the company is either not buying enough product for sales or buying too much product and not selling enough. And that would explain why the cost of goods sold increases or decreases throughout the years.