FOUNDATIONS OF FINANCE-MYFINANCELAB
10th Edition
ISBN: 9780135160619
Author: KEOWN
Publisher: PEARSON
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Chapter 12, Problem 2SP
a)
Summary Introduction
To determine: The corporation’s break-even point in sales dollars.
b)
Summary Introduction
To determine: The percentage increase in EBT and net income.
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(Break-even analysis) You have developed the income statement in the popup window, E, for the Hugo Boss Corporation. It represents the most recent year's operations, which
ended yesterday. Your supervisor in the controller's office has just handed you a memorandum asking for written responses to the following questions:
a. What is the firm's break-even point in sales dollars?
b. If sales should increase by 25 percent, by what percent would earnings before taxes (and net income) increase?
a. What is the firm's break-even point in sales dollars?
$
(Round to the nearest dollar.)
Data table
(Click on the following icon in order to copy its contents into a spreadsheet.)
Sales
$50,582,615
Variable costs
(26,393,000)
Revenue before fixed costs
$24,189,615
Fixed costs
(10,036,000)
EBIT
$14,153,615
Interest expense
(1,334,177)
Earnings before taxes
$12,819,438
Taxes at 21%
(2,692,082)
Net income
$10,127,356
Print
Done
level of net income, what level of sales will the company have to achieve? Assume that Hebner's interest
CEO is unhappy with the forecast and wants the firm to achieve a net income equal to $240,000. In order to achieve this
the company's sales were to increase to $1.5 million, its cost of goods sold would increase to $900,000. The company's
Question 10
Hebner Housing Corporation has forecast the following numbers for this upcoming year:
Sales = $1,000,000.
Cost of goods sold = 600,000.
Interest expense = 100,000.
Net income = 180,000.
The company is in the 40 percent tax bracket. Its cost of goods sold always represents 60 percent of its sales That is if
pense
remains constant.
Question 11
A company expects sales to increase during the coming year, and it is using the AFN equation to forecast the additional capital that it must raise. Which of the following conditions would cause the AFN to DECREASE?
Group of answer choices:
The company begins to pay employees weekly rather than monthly.
The company decides to take discounts on purchased materials.
The company’s profit margin increases.
The company learns that it has no excess capacity.
The company increases its dividend payout ratio.
Chapter 12 Solutions
FOUNDATIONS OF FINANCE-MYFINANCELAB
Ch. 12 - Prob. 1RQCh. 12 - Prob. 3RQCh. 12 - Prob. 4RQCh. 12 - Prob. 5RQCh. 12 - Prob. 1SPCh. 12 - Prob. 2SPCh. 12 - Prob. 3SPCh. 12 - Prob. 4SPCh. 12 - Prob. 5SPCh. 12 - (Capital structure theory) Match each of the...
Ch. 12 - (Capital structure theory) Which of the following...Ch. 12 - Prob. 8SPCh. 12 - Prob. 9SPCh. 12 - (Assessing leverage use) Financial data for three...Ch. 12 - Prob. 1.1MCCh. 12 - Prob. 1.2MCCh. 12 - Prob. 1.3MCCh. 12 - Prob. 1.4MCCh. 12 - Prob. 2.1MCCh. 12 - Prob. 2.2MCCh. 12 - Prob. 2.3MCCh. 12 - Prob. 3.1MCCh. 12 - Prob. 3.2MCCh. 12 - Prob. 3.3MC
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