A company has $2.5 million of sales today, SG&A costs of $2 million excluding depreciation, annual depreciation of $0.6 million, and a COGS of 70%. Management estimates that if there is a large growth in sales, then the increase of SG&A excluding depreciation will equal to 5% of sales increment, and the increase of depreciation will equal to 4% of sales increment. No other income during this time. • Then what are the cash breakeven sales? $ Then what are the book breakeven sales? $ thousand thousand

A company has $2.5 million of sales today, SG&A costs of $2 million excluding depreciation, annual depreciation of $0.6 million, and a COGS of 70%. Management estimates that if there is a large growth in sales, then the increase of SG&A excluding depreciation will equal to 5% of sales increment, and the increase of depreciation will equal to 4% of sales increment. No other income during this time. • Then what are the cash breakeven sales? $ Then what are the book breakeven sales? $ thousand thousand

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Weber Interstate Paving Co. had $450 million of sales and $225 million of fixed assets last year, so its FA/Sales ratio was 50%. However, its fixed assets were used at only 55% of capacity. If the company had been able to sell off enough of its fixed assets at book value so that it was operating at full capacity, with sales held constant at $450 million, how much cash (in millions) would it have generated? Select the correct answer. a. $97.55 b. $104.95 c. $99.40 d. $101.25 e. $103.10
(Calculating changes in net operating working capital) Faraway Fabricators, Inc., is considering the expansion of its welding and stamping division and estimates that this will require the firm's accounts receivable to increase by 12 percent of the added sales. Moreover, Faraway estimates that inventories will be 15 percent of the added cost of goods sold, while accounts payable will be 10 percent of that added cost. The firm's CFO estimates that its sales and cost of goods sold over the five-year estimated life of the investment are as follows: Year Sales Cost of goods sold 0 2 3 5 $150,000 $162,000 $174,960 $188,957 $204,073 $220,399 90,000 97,200 104,976 113,374 122,444 132,240 a. What are the (operating) working-capital requirements of the project for Years 1 through 5? (Hint: You can assume that the expenditure for operating net working capital for Year 1 is made in Year O and so forth.) b. How much additional money must Faraway invest annually because of its working-capital…
A new firm expects to generate Sales of $124,900. POINT BLANK has variable costs of $77,500, and fixed costs of $18,000. The per-year depreciation is $4,300 and the tax rate is 35 percent. What is the annual operating cash flow?
Weber Interstate Paving Co. had $450 million of sales and $225 million of fixed assets last year, so its FA/Sales ratio was 50%. However, its fixed assets were used at only 40% of capacity. If the company had been able to sell off enough of its fixed assets at book value so that it was operating at full capacity, with sales held constant at $450 million, how much cash (in millions) would it have generated? Select the correct answer. a. $133.15 b. $131.30 c. $136.85 d. $135.00 e. $138.70
Stark Industries reports that its average operating assets are $511,000,000 and its net operating income is $147,000,000 on sales of $1,645,000,000 What is the residual income if the required rate of return is 0.11? Round your answer to the nearest dollar.
Last year Baron Enterprises had $200 million of sales, and it had $270 million of fixed assets that were used at 65% of capacity last year. In millions, by how much could Baron's sales increase before it is required to increase its fixed assets? Select the correct answer. a. $120.3 b. $88.8 c. $95.1 d. $101.4 e. $107.7
Give me 3 step calculation this question and explanation.
Weber Interstate Paving Co. had $450 million of sales and $225 million of fixed assets last year, so its FA/Sales ratio was 50%. However, its fixed assets were used at only 85% of capacity. If the company had been able to sell off enough of its fixed assets at book value so that it was operating at full capacity, with sales held constant at $450 million, how much cash (in millions) would it have generated? Select the correct answer. a. $32.15 b. $30.55 c. $36.95 d. $33.75 e. $35.35
Kaler Company has sales of $1,470,000, cost of goods sold of $800,000, other operating expenses of $213,000, average invested assets of $4,700,000, and a hurdle rate of 12 percent. Required: 1. Determine Kaler's return on investment (ROI), investment turnover, profit margin, and residual income. 2. Several possible changes Kaler could face in the upcoming year follow. Determine each scenario's impact on Kaler's ROI and residual income. (Note: Treat each scenario independently.) a. Company sales and cost of goods sold increase by 5 percent. b. Operating expenses increase by $86,000. c. Operating expenses decrease by 20 percent. d. Average invested assets decrease by $415,000. e. Kaler changes its hurdle rate to 9 percent. Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req 2C Req 2D Req 2E Determine Kaler's return on investment (ROI), investment turnover, profit margin, and residual income. Note: Do not round your intermediate calculations. Enter…
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Delsing Canning Company is considering an expansion of its facilities. Its current income statement is as follows: Sales $ 6,300,000 Variable costs (50% of sales) 3, 150,000 Fixed costs 1,930, 000 Earnings before interest and taxes (EBIT) $ 1,220, 000 Interest (10% cost) 460,000 Earnings before taxes (EBT) $760,000 Tax (35 %) 266, 000 Earnings after taxes (EAT) $ 494, 000 Shares of common stock 330, 000 Earnings per share $ 1.50 The company is currently financed with 50 percent debt and 50 percent equity (common stock, par value of $10). In order to expand the facilities, Mr. Delsing estimates a need for $3.3 million in additional financing. His investment banker has laid out three plans for him to consider: Sell $3.3 million of debt at 9 percent. Sell $3.3 million of common stock at $15 per share. Sell $1.65 million of debt at 8 percent and $1.65 million of common stock at $20 per share. Variable costs are expected to stay at 50 percent of sales, while fixed expenses will increase to…
The firm is contemplating the following (base case): Vehicle acquisition cost $ 48,000 Years of useful life (economic life) 1 Tax rate 25% Required rate of return on equity 11% Required return on debt 6% Debt ratio 40% Annual revenues $ 175,000 Operating expenses (excluding depreciation) $ 115,000 1.Depreciate straight-line over the year of useful life, down to $0 over one year. The maximum dividend is paid at year end. Ignore any working capital effects. Capital charge will be based on the assets at the beginning of each year. What's the operating margin?

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