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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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