A Deep Dive into Sports Business Financials

Introduction & Challenge Objective:

The aim is to analyze the financial performance of a sporting goods manufacturer with three business lines: Sports Inventory, Sportswear, and Nutrition & Food Supplements. The dataset includes revenue and expense data, split by month and business line.

I have been asked to include any of these in the report for a detailed anaylsis - calculate the income statement, gross and net profit margins, EBIT margin, and OPEX ratio, as well as compare financial indicators across business lines and perform other financial analysis.

About the Dashboard:

The financial dashboard offers a deep dive into the performance of our diverse business lines, highlighting key metrics and future projections, helping us understand not only where we stand but where we are headed. This analysis identifies both strengths and areas of improvement across our operations.

About the Dataset:

The dataset included 2023 data with 9 fields and 580 records comprising of details on Revenue, Expenses and the subgroups.

Tools Used:

Power BI

Data Preparation & Modelling:

The data was pretty much clean but it required little changes. The dim Date table was added and also separate table was created for preparing the Income Statement.

Data Analysis and Visualization:

Dashboard Designing - I went on to create a 3 page dashboard along with a home page. One page displaying the overview and key metrics, one for the forecast and the yearly Income statement and another for Monthly breakdown of the said Income statement. I wanted to go with a dark background and a little classy and hence extra effort has gone into creating the same.

Insights & Analysis:

Financial Performance:

Total Revenue: Achieved $17.56M, driven primarily by the Sports Equipment and Sportswear segments.

Gross Profit: Recorded at $10.85M, with a strong Gross Margin of 61.78%.

Net Profit: Stands at $4.31M, representing a Net Margin of 24.57%.

Expenses: Recorded at $13.25M, Major expenses include COGS at $6.71M and OPEX at $5.60M.

Sales Forecast:

The forecast shows a projected increase in sales by early 2024, following a mid-year dip in 2023.

Segment Performance:

Sports Equipment: Expected to continue as the top-performing segment with significant sales growth.

Sportswear: Also forecasted to maintain strong sales but with noted volatility.

Nutrition and Food Supplements: Shows a slower recovery, necessitating strategic reassessment.

Margin Analysis:

Gross Margin: Strong across all segments, particularly in Sportswear (70.33%) and Sports Equipment (58.76%).

EBIT Margin: Varies significantly, with Sportswear leading at 45.71% while Nutrition and Food Supplements show a negative margin (-30.86%).

Net Margin: Highest in Sportswear (40.20%), indicating strong profitability.

Analysis by Business Lines:

Business Line 1: Sports Equipment

Revenue:

• Sports Equipment is the top performer with a total revenue of $8.9M, making up a significant portion of the company’s overall revenue.

Margins:

Gross Margin: The gross margin for this segment is solid at 58.76%, indicating efficient cost management and strong pricing strategies.

EBIT Margin: EBIT margin stands at 30.32%, reflecting a healthy operating profit.

Net Margin: With a net margin of 25.71%, Sports Equipment is contributing significantly to the company’s bottom line.

Costs:

COGS: The Cost of Goods Sold (COGS) for this segment is $3.7M, with a significant portion of this attributed to labor costs.

OPEX: Operating expenses are well-managed, ensuring that the segment remains profitable even after accounting for all costs.

Business Line 2: Sportswear

Revenue:

• Sportswear is another strong performer, generating $6.8M in revenue. This segment plays a key role in driving the company’s overall growth.

Margins:

Gross Margin: The gross margin is very strong at 70.33%, indicating effective pricing and cost management strategies.

EBIT Margin: The EBIT margin is 45.71%, showcasing excellent operational efficiency and profitability.

Net Margin: With a net margin of 40.20%, Sportswear is the most profitable segment in terms of percentage margins.

Costs:

COGS: COGS for this segment stands at $2.0M, with a large portion of expenses related to materials and labor. Despite these costs, the high margins indicate effective management.

OPEX: Operating expenses are aligned with the segment's revenue, ensuring that profitability remains strong.

Business Line 3: Nutrition and Food Supplements

Revenue:

• This segment is underperforming with a total revenue of $1.8M, significantly lagging behind the other business lines.

Margins:

Gross Margin: The gross margin is lower at 44.82%, suggesting higher production costs or pricing challenges.

EBIT Margin: The EBIT margin is negative at -30.86%, indicating that the segment is operating at a loss.

Net Margin: Similarly, the net margin is deeply negative at -38.67%, highlighting significant profitability challenges.

Costs:

COGS: COGS is $1.0M, with high costs across labor, materials, and shipping. These high costs are eating into the segment's profitability.

OPEX: Operating expenses are contributing to the negative profitability.

Overall Summary:

Sports Equipment and Sportswear:

• These segments are the backbone of the company’s financial performance, generating strong revenue and maintaining high profitability. The focus should be on sustaining growth through innovation, market expansion, and possibly introducing premium product lines to leverage strong brand equity.

Nutrition and Food Supplements:

• This segment requires urgent attention due to its underperformance. A detailed market analysis and strategic realignment are essential. Cost reduction and market repositioning efforts are critical to turn around this segment.

Strategic Priorities:

Investment: Continue to invest in high-performing segments like Sports Equipment and Sportswear.

Cost Control: Implement stricter cost control measures, particularly in the underperforming Nutrition and Food Supplements segment.

Market Expansion: Explore new markets and product lines to diversify revenue streams and reduce dependency on existing products.

Conclusion:

This project was a great experience in terms of understanding the financial domain as well as work on Income statement generation which was quite interesting. And of course, learning the nuances of Power BI is every bit interesting and exploring the vastness of DAX is truly amazing and rewarding.