Sub : FinancePls answer very fast.I ll upvote CORRECT ANSWER . Thank You 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 10% of sales increment, and theincrease of depreciation will equal to 5% of sales increment.No other income during this time.• Then what are the cash breakeven sales? $• Then what are the book breakeven sales? $,000,000 Polymerco, a North American manufacturer of specialty polymers, has the following highly condense income statement, given in the table below. Their currentsales are to North American customers only. The president casually mentions that it would be nice to have more offshore sales to diversify the company.Polymerco Income StatementGross salesBad debtNet salesCOGSOperating incomeOther income and interest on long-termdebtContribution marginCM(%)SG&A◆This year ($000)26939nil2693922,243469617.4%2,1222574-60%Net income(a) if Polymerco's production is running at 84% capacity, what is the maximum discount in percentage that you can provide? Please keep one decimal in theblank. (Please count the two years' data as the historical performance which gives CM% in a given range, then what is the maximum discount inpercentage that you can provide?)Maximum discount=2514Last year ($000)24293nil2429321,341295212.2%2,067885-50835% Please keep one decimal in the blankIn this case, will you have a negative impact on the contribution margin ($) of the business?(b) if Polymerco's production is running at 100% capacity, how much percentage of discount can you provide without reducing the contribution margin?

Break even point is where all cost are covered including variable cost and fixed cost and there is…

mpany 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 agement estimates that if there is a large growth in sales, then the increase of SG&A excluding depreciation will equal to 10% of sales incre ase of depreciation will equal to 5% of sales increment. ther income during this time. men what are the cash breakeven sales? $ men what are the book breakeven sales? $ ,000 ,000

mpany 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 agement estimates that if there is a large growth in sales, then the increase of SG&A excluding depreciation will equal to 10% of sales incre ase of depreciation will equal to 5% of sales increment. ther income during this time. men what are the cash breakeven sales? $ men what are the book breakeven sales? $ ,000 ,000

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter18: The Management Of Accounts Receivable And Inventories

Section: Chapter Questions

Problem 12P

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Suppose the firm makes the change but its competitors react by making similar changes to their own credit terms, with the net result being that gross sales remain at the current 1,000,000 level. What would be the impact on the firms after-tax profitability?
Happy Times, Incorporated, wants to expand its party stores into the Southeast. In order to establish an immediate presence in the area, the company is considering the purchase of the privately held Joe’s Party Supply. Happy Times currently has debt outstanding with a market value of $120 million and a YTM of 6.8 percent. The company’s market capitalization is $260 million and the required return on equity is 15 percent. Joe’s currently has debt outstanding with a market value of $25.5 million. The EBIT for Joe’s next year is projected to be $17 million. EBIT is expected to grow at 10 percent per year for the next five years before slowing to 3 percent in perpetuity. Net working capital, capital spending, and depreciation as a percentage of EBIT are expected to be 9 percent, 15 percent, and 8 percent, respectively. Joe’s has 2.15 million shares outstanding and the tax rate for both companies is 25 percent. a.What is the maximum share price that Happy Times should be willing to pay for…
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How would answer this question? You are estimating your company's external financing needs for the next year. Your first-pass pro forma financial statements showed a large financing deficit for next year. Which of the following changes to your company's operating plan would reduce the financing deficit if incorporated in revised pro forma financial statements? None of the options are correct. Increase cost of goods sold as a percentage of sales Increase the dividend payout ratio Increase the sales growth rate Reduce the collection period
A firm has been experiencing low profitability in recent years. Performan analysis of the firm’s financial position using the DuPont equation. The firm has no leasepayments but has a $2 million sinking fund payment on its debt. The most recent industryaverage ratios and the firm’s financial statements are as follows: a. Calculate the ratios you think would be useful in this analysis.b. Construct a DuPont equation, and compare the company’s ratios to the industry averageratios.c. Do the balance sheet accounts or the income statement figures seem to be primarilyresponsible for the low profits?d. Which specific accounts seem to be most out of line relative to other firms in the industry?e. If the firm had a pronounced seasonal sales pattern or if it grew rapidly during theyear, how might that affect the validity of your ratio analysis? How might you correctfor such potential problems?
Tesla, Inc., wants to expand its infrastucture into the Midwest. In order to establish an immediate an immediate presence in the area, the company is considering the aquisition of the privately held Rob Allen's Used Car Dealership. Tesla currently has debt outstanding with a market value of $325 million and a yield to maturity of 7.25%. The company's market capitalization is $450 million and the required return on equity is 10.25%. Rob's currently has debt outstanding with a market value of $73.5 million.The EBIT for Rob's next year is projected to be $20.35 million. EBIT is expected to grow at 9.75% per year for the next six years before slowing to 4.50% in perpetuity. Net working capital, capital spending, and depreciation as a percentage of EBIT are expected to be 8.5%, 15.20%, and 6.85% respectively. Rob's has 575,000 shares outstanding and the tax rate for both companies is 21%. Based on these estimates, what is the maximum share price that Tesla should be willing to pay…
Europa Publications, Inc. specializes in reference books that keep abreast of the rapidly changing political and economic issues in Europe. The results of the company’s operations during the prior year are given in the following table. All units produced during the year were sold. (Ignore income taxes.) Required:1. Prepare a traditional income statement and a contribution income statement for the company.2. What is the firm’s operating leverage for the sales volume generated during the prior year?3. Suppose sales revenue increases by 10 percent. What will be the percentage increase in net income?4. Which income statement would an operating manager use to answer requirement (3)? Why?
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