Bс1Cash and book breakeven calculation exampleA company has $2.1 million of sales today, SG&A costs of $1.8 million excluding depreciation, annual depreciationof $0.9 million, and a COGS of 50% (and therefore a contribution margin of 50% or 0.5). Mamagement estimatesthat SG&A will increase from current levels at a rate of 20% of sales if there is a large growth in sales, half due toincreases in depreciation and half due to the increases in staff. Then what are the cash breakeven and book3 Contribution margin (%)250%50%50%4Incremental increase in SG&A(%), (1/2 is depreciation)5 Sales568195A$9 Sales10 COGS11 Contribution Margin$12 SG&A excluding depreciation $13 Depreciation$14 Operating income15 Other income16 Net income17 Operational cash flow$$$2,100 $Current Values ($00 Cash Breakeven ($00 Book Breakeven ($00 Comments2,100 seek goal$2,100 $2,100 $1,050 $1,050 $1,800 $900 $(1,650) $$(1,650) $(750) $$20%2,100 $1,050 $1,050 $1,800 $900 $(1,650) $$(1,650) $(750) $D20%2,100 variablesE1,050 COGS=Sales(1-CM (%))1,050 CM=Sales-COGS1,800 10% increase900 10% increase(1,650)| OI-CM-(SG&A+D)(1,650) NI=OI+Otherl(750) OCF=OI+D What is the level of sales ($) that will reach the exact cash break-even point?Answer:What is the level of sales ($) that will reach the exact book break-even point?Answer:

Answered: Image /qna-images/answer/28fcce3d-dcae-4098-b1fe-bb5a448a699a.jpg

B C 1 Cash and book breakeven calculation example 2 A company has $2.1 million of sales today, SG&A costs of $1.8 million excluding depreciation, annual depreciation of $0.9 million, and a COGS of 50% (and therefore a contribution margin of 50% or 0.5). Mamagement estimates that SG&A will increase from current levels at a rate of 20% of sales if there is a large growth in sales, half due to increases in depreciation and half due to the increases in staff. Then what are the cash breakeven and book 3 Contribution margin (%) 50% 50% 50% Incremental increase in SG&A 4 (%). (1/2 is depreciation) 567899 5 Sales 9 Sales A 10 COGS $ $ $ 12 SG&A excluding depreciation $ 13 Depreciation $ 11 Contribution Margin $ 14 Operating income 15 Other income 16 Net income 17 Operational cash flow $ $ Current Values ($00 Cash Breakeven ($00 Book Breakeven ($00 Comments 2.100 $ 2.100 $ $ 2,100 $ $ 1,050 $ 1,050 $ 1,800 $ 20% 2,100 $ 900 $ (1,650) $ $ (1,650) $ (750) $ 1,050 $ 1,050 $ 1,800 $ 900 $ (1,650) $ $ 20% 2,100 variables (1,650) $ (750) $ E 2,100 seek goal 1,050 |COGS=Sales(1-CM(%)) 1,050 CM=Sales-COGS 1,800 10% increase 900 10% increase (1,650) OI-CM-(SG&A+D) - (1,650)| NI=OI+Otherl (750) OCF=OI+D

B C 1 Cash and book breakeven calculation example 2 A company has $2.1 million of sales today, SG&A costs of $1.8 million excluding depreciation, annual depreciation of $0.9 million, and a COGS of 50% (and therefore a contribution margin of 50% or 0.5). Mamagement estimates that SG&A will increase from current levels at a rate of 20% of sales if there is a large growth in sales, half due to increases in depreciation and half due to the increases in staff. Then what are the cash breakeven and book 3 Contribution margin (%) 50% 50% 50% Incremental increase in SG&A 4 (%). (1/2 is depreciation) 567899 5 Sales 9 Sales A 10 COGS $ $ $ 12 SG&A excluding depreciation $ 13 Depreciation $ 11 Contribution Margin $ 14 Operating income 15 Other income 16 Net income 17 Operational cash flow $ $ Current Values ($00 Cash Breakeven ($00 Book Breakeven ($00 Comments 2.100 $ 2.100 $ $ 2,100 $ $ 1,050 $ 1,050 $ 1,800 $ 20% 2,100 $ 900 $ (1,650) $ $ (1,650) $ (750) $ 1,050 $ 1,050 $ 1,800 $ 900 $ (1,650) $ $ 20% 2,100 variables (1,650) $ (750) $ E 2,100 seek goal 1,050 |COGS=Sales(1-CM(%)) 1,050 CM=Sales-COGS 1,800 10% increase 900 10% increase (1,650) OI-CM-(SG&A+D) - (1,650)| NI=OI+Otherl (750) OCF=OI+D

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Please do not give solution in image format thanku
Question (6) Post Company's 20Y1 net sales were $10,000,000, cash cost of goods sold was $5,500,000, and inventory days on hand was 62 days. The company projects its 20Y2 net sales will be $11,000,000, cash cost of goods sold will be $6,100,000, and inventory days on hand will be 57 days. What would be the cash flow impact of the five-day shortening of inventory days on hand? OA decrease of $75,342. O An increase of $75,342. OA decrease of $83,562. O An increase of $83,562.
Question 2
Question 2 A corporate treasury estimates that an investment of $ 50 million to expand the manufacturing capacity of its company's main product line would generate additional cash flows of $ 12 million per year for 5 years. Assuming a discount rate of 8% calculate: a) The Net Present value of the stream of returns of the expansion b) The profitability index c) The internal rate of return d) Should the company proceed with the investment?
Investment Opportunity Cash Flows in $ 1 3 1,100 $ (500) $ Suppose you are presented with the investment opportunity described in the table above Assume the applicable annual interest rate is 4.75% Calculate the NPV of this investment. Round your answer to two decimals (Do not include the S-sign in your answer, enter negative values with a minus sign and not in parentheses) Year Benefits Costs 2731.16 0 $ $ 350 $ $ (1,100) $ (1,300) $ 2 500 $ (1,500) $ 4 1,500 $ (400) 5 5,000
Problem 2 ABM Enterprise would like to evaluate/analyze an investment proposal. Given the following: Investment amount 450,000 (2022) Dividends / Revenue stream - 100,000 for the first year and an interval of 5,000 for the succeeding years Discount rate - 14% a. NPV for the perio 2023 through 2029; b. Total NPV using manual computation; c. Total NPV using the Excel function; and d. IRR rate.
Chapter 12 problem: Use the following information to determine cash flows for Company ABC. After you find the cash flows, also calculate NPV, IRR, and payback period: Equipment Cost Equipment purchase price: $250,000 Changes in net operating working capital Inventories will rise by $25,000 Accounts payable will rise by $5,000 Effect on operations New sales: 100,000 units/year @ $2/unit Variable cost: 75% of sales Life of the project Economic life: 4 years Salvage value: $30,000 WACC: 15% Tax Rate: 25%