In reviewing the data that is presented it’s apparent that Luna Lighting has
a nice increase in sales. This is because of the inventory turn over, which has increased from 8.1 to 8.3 times and is equal to the industry norm. Luna Lighting has failed to achieve the levels of profitability that other businesses in the same industry have managed to accomplish and there are a few reasons why. Luna’s gross margins of 43% throughout the three years are better than that of the industry but it seems that Luna is incurring a considerable amount of operating expenses as well as high interest cost, which might belong to debt taken for the medium to short term.