12 Do you think Paul should be worried about the change in the profit margins between 2016 and 2017?.....[6]

[BASEL Moderator]

Paul is the Managing Director of a private limited company called PShirts. It manufactures and sells men’s and women’s shirts in country Y. Its products are priced lower than most of its competitors. Sales have fallen recently even though there has been an economic boom. Paul is thinking about starting to sell shirts in other countries. One of the directors is worried about legal controls in other countries. A summary of the accounts is shown in the Table below.

PAUL TABLE.JPG (23.73 KiB) Viewed 190 times

12 Do you think Paul should be worried about the change in the profit margins between 2016 and 2017? Justify
your answer. [6]

Possible KN Points:
• Gross profit margin decreased
• Profit margin decreased
• Revenue decreased
• Cost of sales decreased
• Expenses increased
• Profit decreased