Lemonade Stand — Season Three

This paper provides factual quantative development on Lemonade Stand, sourced from pecuniary statements, the business General Journal and financial data collected during pacifys One, Two and Three. The following sparing summary report allow for consider how well Lemonade Stands business is performing by, among other things, deducting the associations capital costs from its pay. Through digest of the previously stated quantiative info, the company will be able-bodied to bankers bill how well the hold is using capital to build economic assess, with perhaps deploying company resources in ways that will further enhance its economic value.In short, the economic summary reports fundamental objective is to maximize the stands return for its owners, as well as to focus on very precise value-related targets, be they cost reductions, in the altogether investments, or other resource allocation. Over the three season blockage of review, Lemonade Stand has shown a steady revenu e growth. Although this growth is positive, there are aspects of the business that, if managed more efficiently, could have brought the stand a significant ontogenesis in overall profits.First, the price per cup could have been change magnitude end-to-end Season Two instead of maintaining a steady price of $0. 60 during the whole season. This simple increase in price would increase revenues and profits for the season. Second, there was a lack of wise management towards the purchase of supplies during Season Two. It was difficult to forecast the turnout for each day and excess supplies were purchased in prepa ration for a predicted rush of customers.This mismanagement lead to a make off of supplies, especially ice a low inventory derangement, increased expenses overdue to management mistakes instead of business operations and excess inventory at the ending of the season. However, despite the downfall in Season Two, inventory turnover did improve during Season Three as wel l as the stands stream ratio. The Lemonade Stands on-line(prenominal) ratio increased significantly from having $5. 80 in current as locateds for ever $1. 00 in current liabilities in Season One, to having $14. 50 in current assets for every $1. 0 in current liabilities at the conclusion of Season Three. The higher(prenominal) current ratio indicates the liquidty of the business, meaning that there is a greater margin of gum elastic to cover short-run debts. As a result of a higher current ratio, the stand will be able to obtain necessities from short-term creditors much(prenominal) as suppliers, easier than before. The ability to obtain supplies and other necessities from short-term creditors will allow the stand to expand if desired and perhaps secure a more profitable Season Four.In addition, the decrease in the debt-equity ratio is another positive sign that shows us that the stand can be successful in the future if managed properly. The owners of Lemonade Stand place a va lue of $100. 00 toward being their own boss and thus have the freedom and flexibility that they would otherwise not experience while working for another somebody or company. This form of revenue can be found in the stands implicit revenue on the stands balance sheet and is added to the value of learning how to run the business $50. 0 for Season One as well as gaining more information and/or education on increasing profits and learning how to emend manage the stand. During the third season, the stand was more concerned with maximizing returns on resources and therefore lead to a greater economic profit for that season. When the information contained in the business financial statements is used to farm strategic objectives, such as maximizing returns on resources, the stand will be able to focus on those activities that will produce the desired result and in any case guide the owners in the management of the business.By focusing on activities that create the most value and, conv ersley, avoiding devoting inordinate amounts of resources to activities that produce little value the stand will be able to maintain its financial health and beget higher profits in the seasons to come. Lemonade Stand is in a toilsome position to expand and through expansion, will be able to set larger strategic objectives and potentially increase the health and value of the business.