Historical Analysis of Income Statement – A Case Study Salalah Mills Company Oman

Purpose of the study: The objectives of the study were to critically analyse the financial performance of Salalah Mills Company (SMC), to examine the income statement position of the company, and to study the profitability position and improvements of Salalah Mills Company.

Design/Methodology/Approach: The secondary data was obtained from the annual reports of Salalah Mills Company through the income statement for the period 2015 to 2019. The collected data was analyzed using financial ratios involving excel and SPSS, to evaluate the Salalah Mills Company (SMC) profitability.

Findings: The study revealed that the reduction in the company's gross profit (profit margin), the pre-tax margin was due to the increase in the cost of goods sold, administrative expenses, the cost of materials consumed, the selling and distribution expenses and the labour cost.

Research Implications: The study suggested that the company should reduce the cost of sales and administrative expenses to achieve an increased gross profit margin. It was also suggested that the company should focus more on marketing.

Practical Implications: The study suggested that the company should look for alternatives for raw materials such as buying wheat from the local farmers. It was also suggested that the company should work on finding ways and means to achieve good profits so as to satisfy the shareholders.

Originality/value: This research work is of its first own kind as the study focuses on the accounting perspectives of the food company in the Sultanate of Oman.