Margin Analysis -Please Help

[sb05r6]

I am very new to accounting. I have just graduated. My boss recently threw a project at me. He asked me to look at the Margin for 2009 and 2010. Summarize the loss.

So what I did, I went through the financials for 2009 and 2010, I highlighted all of the items with a negative margin. I also highlighted items that have a lower margin than last year.

I will be writing a summary with details of those items and sending an excel spreadsheet with those items' numbers and dollars.

Would this be a good analysis?

 

[ArcSine]

You may already be planning on this, but one thing that comes immediately to mind is to show, for each product or product line, 3 stats: Unit Margin; Total Margin (i.e., Unit Margin x No. of units sold); and amount of year-over-year change (2009 margin vs. 2010 margin).

Total Margin shows how much each product contributes to the company's overall total margin....that is, a product with a low individual Unit Margin would be less of a concern if it's a relatively small part of your total sales. Similarly, it highlights where you need to focus your efforts in bringing up poor margins....concentrate on those products that represent a larger % of the total.

The third stat (year-over-year decline or improvement in margin) would highlight favorable or unfavorable trends that warrant attention (although a 3- or 4-year analysis might be more meaningful on this one).

With those 3 stats identified for each product, you could then quickly knock out three tables showing the products ranked (high to low, e.g.) for each statistic.

Keep in mind that while certain forms of stats and info are somewhat universal in their appeal and usefulness, there are a lot of other ways of analyzing data that are situation-specific. Let your knowledge of your own company guide you to what info is useful to management in your case. Might not hurt to spend a few minutes over lunch talking with some of the seniors to find out what info they tend to lean on most heavily (with your boss' knowledge and consent, of course....don't make it look like an 'end run' around him!).

Best of luck with the project,