Accounting
Drizzy462
Documents.zipBobble in Style Excel- NPV, Break Even, Contribution Margin.xlsx
Net Present Value
| Palmer Brady | |
| Financial Analysis Task 4 Net Present Value - Break Even Analysis - Contribution Margin | |
| 4. Net Present Value: The Lees are considering adding a new piece of equipment that will speed up the process of building the bobble heads. The cost of the piece of equipment is $42,000. It is expected that the new piece of equipment will lead to cash flows of $17,000, $29,000, and $40,000 over the next 3 years. If the appropriate discount rate is 12%, what is the NPV of this investment? Explain the findings. | |
| Discount Rate | 12% |
| Year 0 | $ (42,000.00) |
| Year 1 | $ 17,000.00 |
| Year 2 | $ 29,000.00 |
| Year 3 | $ 40,000.00 |
| NPV = | $ 24,768.40 |
Break - Even Analysis
| Break-Even Analysis: You have been asked to calculate how many units need to be sold to break even, based on the costs provided in task #3. Assume that only one conference will be attended and the estimated expenses associated with this conference are on target. Also assume that the value for total units per year is based on sales of 70 units per month. Therefore total units sold per year are 840. The selling price per unit is $79. | |||||||
| # of units to break even = ? | A. | Advertising Fees= $4,000 | |||||
| One conference attended, costs on target | B. | Labor= $400/ month | |||||
| Total unites per month =70 | C. | Packing supplies= $3,000 | |||||
| Units per year =840 | D. | Office Supplies = $800 | |||||
| Price - $79 | E. | Phone & Internet service = $115 / month | |||||
| F. | Product Supplies = $9,000 | ||||||
| Bobble in Style Inc. | G. | Shipping Fees = $1,000/ month | |||||
| H. | Conference Exhibitor Fee = $3,000 | ||||||
| Expense | Month | Year | I. | Travel Expense for Conference = $1,200 | |||
| Advertising Fee | $ 333.33 | $ 4,000.00 | J. | Utilities for Home Workshop = $105/ month | |||
| Labor | $ 400.00 | $ 4,800.00 | |||||
| Packing Supplies | $ 250.00 | $ 3,000.00 | |||||
| Office Supplies | $ 66.67 | $ 800.00 | Break Even Analysis | ||||
| Phone & Internet service | $ 115.00 | $ 1,380.00 | Month | Year | |||
| Product Supplies | $ 750.00 | $ 9,000.00 | Total Cost | $3,370.00 | $40,440.00 | ||
| Shipping Fees | $ 1,000.00 | $ 12,000.00 | Unit Price | $79.00 | $79.00 | ||
| Conference Exhibitor Fee | $ 250.00 | $ 3,000.00 | |||||
| Travel Expense for Conference | $ 100.00 | $ 1,200.00 | Break Even | 42.66 | 511.90 | ||
| Utilities for Home Workshop | $ 105.00 | $ 1,260.00 | |||||
| Total Expenses | $ 3,370.00 | $ 40,440.00 | The break even point for the month is 43 units and 512 units for the year | ||||
Contribution Margin
| Contribution Margin: Based on the Break-Even Analysis just performed, what is the contribution margin per unit? | |||||
| Bobble in Style Inc. | |||||
| Variable Expense | Month | Year | Sale Price | $79.00 | |
| Labor | $ 400.00 | $ 4,800.00 | Price per unit = $48.14 | ||
| Packing Supplies | $ 250.00 | $ 3,000.00 | |||
| Product Supplies | $ 750.00 | $ 9,000.00 | |||
| Shipping Fees | $ 1,000.00 | $ 12,000.00 | |||
| Total Variable Exp. | $ 2,400.00 | $ 28,800.00 | |||
| Total Var. Exp. Per Unit | $ 34.29 | $ 34.29 | |||
| # of Units | 70 | $ 840.00 | |||
| Price per unit | $79.00 | $79.00 | |||
| Contribution Margin | $44.71 | ||||
Bobble in style- Group 2 PPT.pptx
Bobble in style 20XX
Jasmyne carr
Adetolani adeosun
Aaron luetzen
Palmer Brady
Hcad 640- group 2
Executive summary
Financial statements income statement
| Bobble in Style | |
| Income Statement | |
| For the Year Ending December 20XX | |
| Net Sales | $ 31,362 |
| Cost of Goods Sold | $ 10,276 |
| Gross Margin | $ 21,086 |
| Sales & Marketing | $ 2,000 |
| Research & Development | $ - |
| General & Administrative | $ 3,005 |
| Operating Expenses | $ 5,005 |
| Gross Profit | $ 16,081 |
| Depreciation | $ (800) |
| Amortization | $ - |
| Earning Before Interest & Taxes | $ 15,281 |
| Interest Income | $ - |
| Earnings Before Taxes | $ 15,281 |
| Income Taxes | $ 3,973 |
| Net Income | $ 11,308 |
Financial statements cash flow
| Bobble in Style | |
| Cash Flow Statement | |
| For the Period January - December 20XX | |
| Cash Flow from Operating Activities: | |
| Cash Received from Customers | $ 11,308.00 |
| Depreciation | $ 800.00 |
| Interest & Dividends Received | $ - |
| Cash Provided by Operating Activities | $ 12,108.00 |
| Cash Paid to Suppliers & Employees | $ (1,600.00) |
| Interest Paid | $ (345.00) |
| Income Taxes Paid | $ (3,973.00) |
| Cash Disbursed for Operating Activities | $ (5,918.00) |
| Net Cash Flow from Operating Activities | $ 6,190.00 |
| Cash Flow from Investing Activities: | |
| Purchases of Marketable Securities | |
| Proceeds from Sales of Marketable Securities | $ 3,000.00 |
| Loans Made to Borrowers | $ - |
| Collections on Loans | $ - |
| Purchases of Plant Assets | $ - |
| Proceeds from Sales of Plant Assets | $ - |
| Net Cash Used by Investing Activities | $ 3,000.00 |
| Cash Flows from Financing Activities: | |
| Proceeds from Short Term Borrowing | $ - |
| Payments to Settle Short Term Debts | $ (5,000.00) |
| Proceeds from Issuing Bonds Payable | $ - |
| Proceeds from Issuinig Capital Stock | $ - |
| Dividends Paid | |
| Net Cash Provided by Financing Activities | $ (5,000.00) |
| Net Increase in Cash | $ 4,190.00 |
| Cash and Cash Equivalents, Beginning of Year | $ 21,120.00 |
| Cash and Cash Equivalents, End of Year | $ 25,310.00 |
Financial statements balance sheet
| Bobble in Style | ||||
| Balance Sheet | ||||
| As of December 31, 20XX | ||||
| ASSETS | LIABILITIES + OWNERS EQUITY | |||
| Cash | $ 21,120.00 | Accounts Payable | $ 200.00 | |
| Accounts Recievable | $ 496.00 | Accrued Expenses | $ - | |
| Inventory | $ 10,507.00 | |||
| Prepaid Expenses | $ - | Current Debt | $ - | |
| Current Assets | $ 32,123.00 | Income Taxes Payable | $ - | |
| Current Liabilities | $ 200.00 | |||
| Goodwill | $ - | |||
| Patents | $ - | Long Term Debt | $ - | |
| Other Assets | $ - | |||
| Common Stock | $ - | |||
| Property, Plant & Equipment | $ - | Preferred Stock | $ - | |
| Accumulated Depreciation | $ (1,000.00) | Retained Earnings | $ 30,923.00 | |
| Net Fixed Assets | $ (1,000.00) | Shareholders Equity | $ 30,923.00 | |
| Total Assets | $ 31,123.00 | Total Liabilities + Owners Equity | $ 31,123.00 | |
Financial ratios
Net Profit Margin
Net Profit/ Total Revenue X 100
= ($11,900.00/ $32,742.00) X 100
= 36.34 %
Quick Ratio
(Current Assets – Inventory) / Current Liabilities
= ($32,123.00 - $10,507) / 200
= 108.08
Debt to Equity Ratio
Total Liabilities / Total Equity
= $0.00/ $30,923.00
= $0.00
Cost classification
Net present value
Purchasing new production equipment will cost $42,000.00 and will generate following cash flow over the next 3 years with a discount rate of 12%
Year 0 = ($42,000.00)
Year 1 = $17,000.00
Year 2 = $29,000.00
Year 3 = $40,000.00
The Net Present Value of this investment is $24,768.40
Budget preparation
Incremental analysis
Break-even analysis
Sales average 70 units per month
Sale price of $79.00 per unit
Total fixed and variable costs per month are $3,370.00
Must sell 43 units per month to breakeven
Contribution Margin
| Bobble in Style Inc. | |||
| Variable Expense | Month | Year | |
| Labor | $ 400.00 | $ 4,800.00 | |
| Packing Supplies | $ 250.00 | $ 3,000.00 | |
| Product Supplies | $ 750.00 | $ 9,000.00 | |
| Shipping Fees | $ 1,000.00 | $ 12,000.00 | |
| Total Variable Exp. | $ 2,400.00 | $ 28,800.00 | |
| Total Var. Exp. Per Unit | $ 34.29 | $ 34.29 | |
| # of Units | 70 | $ 840.00 | |
| Price per unit | $79.00 | $79.00 | |
| Contribution Margin | $44.71 |
recommendations
conclusion
Financial Analysis Task 3.html
Financial Analysis Task 3.xlsx
Cost Classification
| Bobble in Style | ||||
| Cost Classification | ||||
| For the Year Ending December 20XX | ||||
| Variable Costs | Fixed Costs | |||
| Packaging Supplies | $3,000.00 | Advertising Fees | $4,000.00 | |
| Office Supplies | $800.00 | Labor | $400.00 | |
| Product Supplies | $9,000.00 | Conference Exhibitor Fee | $3,000.00 | |
| Travel Expenses for Conference (e.g. airfare, meals, taxi) | $1,200.00 | Phone & Internet Services (monthly) | $115.00 | |
| Shipping Fees | $1,000.00 | Part Time Employee Hours (monthly) | $400.00 | |
| Util. for the Home workshop (monthly) | $105.00 | |||
| $15,105.00 | $7,915.00 | |||
| When creating a cost classification plan it is important to distinguish the difference between variable and fixed costs because one cost list will stay consisten while the other may flex a little depending on a few variables around output. Fixed good costs will stay consistent no matter what the output of units are or services provided. Where variable costs can fluctuate very easily from the baseline of estimated costs. | ||||
Budget Preparation
| Bobble in Style | ||||
| Budget Preparation | ||||
| For the Year Ending December 20XX | ||||
| Variable Costs | Fixed Costs | |||
| Packaging Supplies | $3,000.00 | Advertising Fees | $4,000.00 | |
| Office Supplies | $800.00 | Labor | $400.00 | |
| Product Supplies | $9,000.00 | Conference Exhibitor Fee | $3,000.00 | |
| Travel Expenses for Conference (e.g. airfare, meals, taxi) | $1,200.00 | Phone & Internet Services (monthly) | $115.00 | |
| Shipping Fees | $1,000.00 | Part Time Employee Hours (monthly) | $400.00 | |
| Util. for the Home workshop (monthly) | $105.00 | |||
| Total Variable Costs (Based on 70 units) | $15,105.00 | Total Fixed Costs | $7,915.00 | |
| Total Variable Costs/Monthly Qty. = unit price | $15,105/70 = | $215.79 | ||
| Shark Tank Prediction x unit price = | 250 x $215.79 = | |||
| Shark Tank Prediction for variable costs | $53,946.43 | |||
FINANCIAL RATIOS.xlsx
Sheet1
| FINANCIAL RATIOS | |||||||
| NET PROFIT MARGIN | NET PROFIT / TOTAL REVENUE X 100 | ||||||
| 11,900 | /32,742 | 0.3634 OR 36.34 % | |||||
| QUICK RATIO | CURRENT ASSETS - INVENTORY | 32123 - 10507 | |||||
| CURRENT LIABILITIES | 200 | ||||||
| QUICK RATIO IS 108.08 | |||||||
| DEBT TO EQUITY RATIO | TOTAL LIABILITIES | 0 DEBT TO EQUITY RATIO IS ZERO (0) SINCE THERE IS NO DEBT FINANCING | |||||
| TOTAL EQUITY | 30,923 |
Incremental Analysis.docx
The per month expense for option 1 = 1200 + 350 = 1550
The per month expense for option 2 = 1350 + 150 = 1500
Incremental cash flow of relative to 2 = -1550 + 1500= -50
Incremental NPV= ( -50/.01 ) * ( 1-1/1.01^12 ) = -$ 562.75
Purpose of Each Financial Statement.docx
Purpose of Each Financial Statement
Income Statement: The Income Statement examines the company’s earning over a period of time. It accounts for all revenues and then deducts all expenses incurred to determine the company’s net profit or loss for that period.
Cash Flow Statement: The Cash Flow Statement analyzes how a company has utilized cash and cash equivalents. It examines cash inflows and outflows from operating, investing, and financing activities to determine the net increase or decrease of cash.
Balance Sheet: The balance sheet provides a snapshot of a company’s assets, liabilities and equity, both long-term and short-term, on one particular date. The total amount of a company’s assets must be the same as the sum of their liabilities and equity, i.e. both sides must balance.
UPDATED 11.16.18 Group Project Financial Statements.xlsx
Income Statement
| Bobble in Style | ||
| Income Statement | ||
| For the Year Ending December 20XX | ||
| Net Sales | $ 32,742 | |
| (gross sales - coupons) | ||
| Cost of Goods Sold | $ 10,276 | |
| Gross Margin | $ 22,466 | |
| Sales & Marketing | $ (2,000) | |
| (advertising) | ||
| Research & Development | $ - 0 | |
| General & Administrative | $ (4,385) | |
| (bank +phone + utilities + office supplies + shipping) | ||
| Operating Expenses | $ (6,385) | |
| Gross Profit | $ 16,081 | |
| Depreciation (assumed from cash flow data) | $ (800) | |
| Amortization | $ - 0 | |
| Earning Before Interest & Taxes | $ 15,281 | |
| Interest Income | $ - 0 | |
| Earnings Before Taxes | $ 15,281 | |
| Income Taxes | $ (3,973) | |
| Net Income | $ 11,308 |
Cash Flow Statement
| Bobble in Style | ||
| Cash Flow Statement | ||
| For the Period January - December 20XX | ||
| Cash Flow from Operating Activities: | ||
| Cash Received from Customers | $ 11,308 | |
| Depreciation | $ 800.00 | |
| Interest & Dividends Received | $ - 0 | |
| Cash Provided by Operating Activities | $ 12,107.94 | |
| Cash Paid to Suppliers & Employees | $ (1,600.00) | |
| Interest Paid | $ (345.00) | |
| Income Taxes Paid | $ (3,973) | |
| Cash Disbursed for Operating Activities | $ (5,918.06) | |
| Net Cash Flow from Operating Activities | $ 6,189.88 | |
| Cash Flow from Investing Activities: | ||
| Purchases of Marketable Securities | $ - 0 | |
| Proceeds from Sales of Marketable Securities | $ 3,000.00 | |
| Loans Made to Borrowers | $ - 0 | |
| Collections on Loans | $ - 0 | |
| Purchases of Plant Assets | $ - 0 | |
| Proceeds from Sales of Plant Assets | $ - 0 | |
| Net Cash Used by Investing Activities | $ 3,000.00 | |
| Cash Flows from Financing Activities: | ||
| Proceeds from Short Term Borrowing | $ - 0 | |
| Payments to Settle Short Term Debts | $ (5,000.00) | |
| Proceeds from Issuing Bonds Payable | $ - 0 | |
| Proceeds from Issuinig Capital Stock | $ - 0 | |
| Dividends Paid | ||
| Net Cash Provided by Financing Activities | $ (5,000.00) | |
| Net Increase in Cash | $ 4,189.88 | |
| Cash and Cash Equivalents, Beginning of Year | $ 21,120.00 | |
| Cash and Cash Equivalents, End of Year | $ 25,309.88 |
Balance Sheet
| Bobble in Style | |||||
| Balance Sheet | |||||
| As of December 31, 20XX | |||||
| ASSETS | LIABILITIES + OWNERS EQUITY | ||||
| Cash | $ 21,120.00 | Accounts Payable | $ 200.00 | ||
| Accounts Recievable | $ 496.00 | Accrued Expenses | $ - 0 | ||
| Inventory | $ 10,507.00 | ||||
| Prepaid Expenses | $ - 0 | Current Debt | $ - 0 | ||
| Current Assets | $ 32,123.00 | Income Taxes Payable | $ - 0 | ||
| Current Liabilities | $ 200.00 | ||||
| Goodwill | $ - 0 | ||||
| Patents | $ - 0 | Long Term Debt | $ - 0 | ||
| Other Assets | $ - 0 | ||||
| Common Stock | $ - 0 | ||||
| Property, Plant & Equipment | $ - 0 | Preferred Stock | $ - 0 | ||
| Accumulated Depreciation | $ (1,000.00) | Retained Earnings | $ 30,923.00 | ||
| Net Fixed Assets | $ (1,000.00) | Shareholders Equity | $ 30,923.00 | ||
| Total Assets | $ 31,123.00 | Total Liabilities + Owners Equity | $ 31,123.00 | ||
