Trend & Growth Analysis Report
Period Ending August 31, 2025 | Comparative Financial Analysis
Executive Summary
Acme, Inc. faces significant operational challenges in 2025, with a YTD net loss of $1.54M despite 23% revenue growth.
The company has successfully expanded revenue streams through Design & Consultancy (+22,056%) and Furniture Hire (+4,175%),
but profitability has been severely impacted by operational inefficiencies, resulting in a negative 12.5% net margin.
$12.3M
YTD Revenue
+23.3% YoY
-$1.54M
YTD Net Income
-122.1% YoY
40.7%
Gross Margin
-29.3pp YoY
3.03x
Current Ratio
-11.5x YoY
Revenue & Sales Growth Trends
Monthly Performance
| Metric |
August 2025 |
July 2025 |
MoM Change |
August 2024 |
YoY Change |
| Total Revenue |
$5,677,474 |
$2,799,505 |
+102.8% |
$774,067 |
+633.4% |
| Domestic Furniture |
$3,707,240 |
$1,724,915 |
+114.9% |
$698,010 |
+431.0% |
| Office Furniture |
$456,714 |
$357,591 |
+27.7% |
$74,746 |
+510.9% |
| Design & Consultancy |
$1,178,634 |
$88,384 |
+1,233.4% |
$0 |
New Revenue |
Key Growth Drivers: August 2025 showed exceptional recovery with 103% MoM growth, driven by Design & Consultancy services
which contributed $1.18M (21% of monthly revenue). This represents successful diversification beyond traditional furniture sales.
Year-to-Date Performance
| Revenue Stream |
YTD 2025 |
YTD 2024 |
$ Change |
% Change |
| Total Revenue |
$12,317,363 |
$5,767,661 |
+$6,549,702 |
+113.5% |
| Domestic Furniture |
$7,690,856 |
$5,312,226 |
+$2,378,630 |
+44.8% |
| Design & Consultancy |
$2,419,404 |
$5,600 |
+$2,413,804 |
+43,104% |
| Furniture Hire |
$365,464 |
$1,311 |
+$364,153 |
+27,787% |
Profitability Analysis
Margin Trends
| Metric |
August 2025 |
July 2025 |
YTD 2025 |
YTD 2024 |
YoY Change |
| Gross Margin % |
26.5% |
34.1% |
40.7% |
100.0% |
-59.3pp |
| Operating Margin % |
11.3% |
-91.7% |
-4.9% |
99.7% |
-104.6pp |
| Net Margin % |
13.3% |
-129.2% |
-12.5% |
99.7% |
-112.2pp |
Critical Issue: Despite revenue growth, gross margin has collapsed from 100% to 40.7% YTD,
indicating severe cost management issues. The COGS/Revenue ratio increased to 59.3% from near zero in 2024.
Expense Analysis
Operating Expense Breakdown (YTD)
| Expense Category |
YTD 2025 |
% of Revenue |
YTD 2024 |
% Change |
| Salaries & Wages |
$1,139,071 |
9.2% |
$0 |
New Expense |
| Advertising |
$1,418,752 |
11.5% |
$0 |
New Expense |
| Bad Debt Expense |
$792,762 |
6.4% |
$0 |
New Expense |
| Depreciation |
$717,351 |
5.8% |
$102 |
+703,383% |
| Rent Expense |
$436,038 |
3.5% |
$0 |
New Expense |
| Total OpEx |
$5,609,901 |
45.6% |
$15,758 |
+35,498% |
Operating expenses exploded from $15.8K to $5.6M YTD, representing 45.6% of revenue.
Key drivers include new workforce costs ($1.1M), aggressive marketing ($1.4M), and concerning bad debt levels ($793K).
Balance Sheet Trends
Asset Movement
| Asset Category |
Aug 2025 |
Jul 2025 |
MoM Change |
Dec 2024 |
YTD Change |
| Cash & Banks |
$41,444,752 |
$40,263,827 |
+2.9% |
$33,875,637 |
+22.3% |
| Accounts Receivable |
$5,522,999 |
$2,590,407 |
+113.2% |
$789,075 |
+599.9% |
| Inventory |
$14,842,725 |
$14,600,980 |
+1.7% |
$17,066,075 |
-13.0% |
| Total Assets |
$61,990,738 |
$57,613,656 |
+7.6% |
$51,764,878 |
+19.8% |
Liability & Equity Movement
| Category |
Aug 2025 |
Jul 2025 |
MoM Change |
Dec 2024 |
YTD Change |
| Accounts Payable |
$3,288,504 |
$3,807,916 |
-13.6% |
$22,451 |
+14,547% |
| Deferred Revenue |
$1,317,671 |
$1,238,582 |
+6.4% |
$57,973 |
+2,173% |
| Total Current Liabilities |
$13,273,738 |
$11,791,854 |
+12.6% |
$3,664,732 |
+262.2% |
| Total Equity |
$48,716,999 |
$45,821,802 |
+6.3% |
$48,100,146 |
+1.3% |
Growth Ratios & KPIs
Key Financial Ratios
| Ratio |
Aug 2025 |
Jul 2025 |
Dec 2024 |
Status |
| Current Ratio |
4.69 |
4.91 |
14.12 |
Declining |
| Quick Ratio |
3.57 |
3.67 |
9.47 |
Declining |
| Debt-to-Equity |
0.27 |
0.26 |
0.08 |
Increasing |
| ROA (Annualized) |
-3.0% |
-4.8% |
13.5% |
Negative |
| ROE (Annualized) |
-3.8% |
-6.0% |
14.5% |
Negative |
| Inventory Turnover |
0.49x |
0.13x |
0.18x |
Improving |
| AR Days Outstanding |
35.5 |
33.7 |
28.8 |
Worsening |
Cash Flow Implications
Based on balance sheet movements and income statement trends:
Operating Cash Flow Indicators
- Positive: Strong cash position increased $7.6M YTD to $41.4M, providing operational cushion
- Negative: AR surge of $4.7M indicates collection challenges; bad debt expense of $793K confirms credit risk
- Mixed: Inventory reduction of $2.2M freed working capital but may indicate supply chain adjustments
Working Capital Changes
| Component |
YTD Change |
Impact on Cash |
| Accounts Receivable |
+$4,733,924 |
Cash Use |
| Inventory |
-$2,223,350 |
Cash Source |
| Accounts Payable |
+$3,266,052 |
Cash Source |
| Deferred Revenue |
+$1,259,697 |
Cash Source |
| Net Working Capital Impact |
+$2,031,475 |
Net Source |
Trend Visualizations
Revenue Mix Evolution (% of Total)
YTD 2024
Domestic Furniture 92%
Office 8%
YTD 2025
Domestic 62%
Office 8%
Design 20%
Other 10%
Monthly Net Income Trend
July 2025: -$3.6M
Loss: -$3,615,578
August 2025: +$0.8M
Profit: +$754,527
Risks & Opportunities
Critical Risks
- Profitability Crisis: YTD net loss of $1.54M despite 113% revenue growth indicates unsustainable operations
- Credit Risk: AR increased 600% with $793K bad debt expense, suggesting collection problems
- Cost Structure: OpEx ratio of 45.6% versus 0.3% prior year shows lack of expense control
- Margin Compression: Gross margin fell from 100% to 40.7%, indicating pricing or procurement issues
- Liquidity Pressure: Current ratio declined from 14.1x to 4.7x as liabilities grew 262%
Growth Opportunities
- Service Diversification: Design & Consultancy revenue of $2.4M validates new business model
- August Recovery: Return to profitability (+$755K) with 103% MoM growth shows potential
- International Expansion: Multi-currency operations across 7+ countries provide geographic diversification
- Cash Position: $41.4M cash provides runway for operational improvements
- Deferred Revenue: $1.3M indicates strong forward bookings and customer commitments
Conclusion & Recommendations
Strategic Recommendations
Immediate Cost Restructuring: Reduce OpEx ratio from 45.6% to target 25% through workforce optimization
and marketing spend efficiency. Focus on ROI-driven advertising versus current $1.4M spend.
Margin Recovery Program: Investigate gross margin decline from 100% to 40.7%. Review pricing strategy,
supplier contracts, and product mix to restore target 60%+ gross margins.
Credit Management: Implement stricter credit policies to address $793K bad debt.
Reduce AR days from 35.5 to industry standard 30 days. Consider factoring for immediate cash.
Focus on Profitable Growth: Prioritize high-margin Design & Consultancy services (currently 20% of revenue).
Set target of 35% revenue mix by Q4 2025.
Working Capital Optimization: Leverage strong cash position to negotiate better supplier terms.
Target 15% reduction in COGS through volume discounts and strategic sourcing.
Performance Monitoring: Implement weekly cash flow forecasting and monthly margin analysis.
Set profitability milestone of breakeven by October 2025.
Bottom Line
While Acme achieved impressive 113% YTD revenue growth and successfully diversified into services,
the company faces a profitability crisis with -12.5% net margins. The August 2025 return to profitability
demonstrates recovery potential, but immediate action on cost structure and margin improvement is critical.
With $41.4M in cash, the company has resources to execute a turnaround, but the window for action is narrowing
as current burn rate is unsustainable.
Recommendation Priority: Focus on profitability over growth. Target breakeven by Q4 2025 through
aggressive cost reduction and margin improvement initiatives.