Financial Analysis Report--Rowe Pottery Works, Inc

Financial Analysis Report--Rowe Pottery Works, Inc.

Introduction

Rowe Pottery Works was established in 1975 in Cambridge, Wisconsin. In the late 1970s, as a two-person pottery studio and shop, sales were made through art fairs and the studio showroom. Jim did the pottery production on the potter's wheel and the pots were fired in the brick kiln out behind the small workshop. Interest in collecting antique cobalt blue decorated salt glaze crocks and jugs was the inspiration to change the studio's pottery product line in early 1980. Rowe Pottery went from making Jim's personal pottery style of salt glaze to museum quality reproductions of Early American crocks and jugs. The value of early crockery was skyrocketing and quality adaptations of the early designs were not available (http://www.rowepottery.com/aboutus/index.html).

As demand for company products grew, the Rowe’s began selling their pottery to gift shops across the country. Today RPW sells more salt-glazed pottery than any other producer in the country. The company operates two stores and a wholesale decorative ironworks business (Mayhew, G. & Mayhew, B).

Rowe Pottery Works Inc. (RPW) has been losing money for over two and a half years since 1994. The RPW’s pottery operation was the main source of the losses. The pottery operation provides a majority of the company’s revenue leading the company to depend heavily upon its success. The net losses for the company have reached -99,347 in first half year of 1996. The company has been trying to control costs have, but the results of the efforts have not been met the expectation of the company’s president as he believes there is a strong market for PRW’s products.

The purpose of this report is to provide an overview of Rowe Pottery Works, Inc financial situation. This is done by analyzing the information provided by my instructor CPA Kathy MacLellan from Baker College. The purpose of this report is to provide a guide Row’s future financial plans by using the accounting knowledge I have obtained from this Management accounting class. Throughout this report I hope to offer some accurate and effective advice on improving RPW financial situation (during the time).

Profitability Review

Financial report analysis

Table 1

Modified by adding in the ratios comparison

Table 1

Rowe Pottery Works, Inc.

Income Statement