Lemonade Stand Written Report

Lemonade Stand Written Report

Calvin Poarch

BUS 599 – Introduction to Quantitative Principles

Instructor Lee Meadows

July 11, 2011

Lemonade Stand Written Report

Written reports are used in business to document pertinent company information so that individuals can best analyze the state of their business. These reports are essential in enabling managers at all levels to make important, informed business decisions. This report will inform the reader of balance sheet, income statement and journal documentation for the lemonade stand business as discussed in week two of our class.

The income statement describes a company’s revenues and expenses along with the resulting net income or loss over a period of time due to earnings activities (Brownfield, 2007). This statement is also known as the bottom line because it reflects an indication of a company’s net profit or loss. The net profit or loss incurred over a specific accounting period is typically reported over a fiscal quarter or year.

In the lemonade stand business the income statement reflects revenue, expenses, and the net profit for season one at the fair, which consisted of six days. In this case, revenue generated from sales was $220.74, while the expenses for equipment and supplies were $58.25. The net profit for season one was $162.49. The two owners of the business can see rather quickly that they quadrupled their investment during the first season. Profit margin (net income divided by revenue) can then be calculated and the owners can see how many cents on each dollar of sales contributes to their bottom line or net income. In this case the profit margin is 74% or stated another way, 74 cents out of each dollar of sales contributes to the stand’s net income. This possibly indicates that the stands’ pricing strategy is very good or that the competition has little impact on margins or both.

The balance sheet is a financial statement that summarizes a company’s financial position (types...