Final Application Project

1 percent of net sales in 2012 a 75 million increase

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Unformatted text preview: l to really change the rubber and tire industry for the better. This poses great opportunities for the Cooper Tire & Rubber Company as they lead this tire technology development initiative. Earnings and Fundamentals Three items that caused changes in company’s sales: Net sales increase $293 million (7.5% increase) from 2011 to 2012. This increase is partially due to the following: 1. Higher unit volumes ($227 million) 2. Favorable pricing and mix ($41 million) 3. Favorable currency translation ($25 million) Changes in the Cost of Goods Sold: 1. The company expanded operations to lower- cost countries. More specifically the Cooper Kunshan Tire manufacturing operation, a joint venture manufacturing operation in Mexico. Facilities were also expanded to Serbia, providing a lower- cost source of tires and increase the market share in Mexico. 2. Closed the Albany, Georgia manufacturing facility, lowering its production costs in the US and improving its competitiveness of manufacturing operations. The manufacturing operation in Mexico definitely relates to the increase in sales considering it contributed to an increase market share in Mexico. Two items that changed in general administrative expenses and their influence on sales: • General administrative expenses were $257 million (6.1 percent of net sales) in 2012, a $75 million increase compared with 2011’s $182 million (4.6 percent of net sales) general administrative expense. This increase is due primarily to increased costs related to brand investments, including selling expenses ($29 million), incentive based compensation ($24 million) and increases in accruals for stock-based liabilities ($10 million). • Take...
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