Question

saw it's Your Turn.. Ise the Strategie Profit Model Flow Worksheets provided on the following page 1 complete the following two scenarios: Scenario 3 Scenario 4 Income Statement Sales Income Statement Sales Gross Sales $800,000 $1,400,000 Gross Sales Prmotional Allowances $75,000 Pemotional Allowances $150,000 Customer Returns -$45,000 -$110.000 Customer Returns Total Net Sales Total Net Sales Cost of Goods Sold Cost of Goods Sold COGS $850,000 $600,000 COGS Total COGS Total COGS Gross Margin Gross Margin Expenses Expenses Selling. General & Admir $145,000 Selling. General & Admir $120,000 Financing $6,500 $5,000 Financing Total Expenses Total Expenses Net Profit Before Tax (EBT) Net Profit Before Tax (EBT) Tax Rate 35% Tax Rate 35% Total Taxes Total Taxes Net Profit After Tax Net Profit After Tax Scenario 3 Scenario 4 Balance Sheet Balance Sheet Assets Liabilities Assets Liabilities Current Assets Current Liabilities Current Assets Current abilities Accounts Receivable $50,000 Accounts Payable $150.000 Accounts Receivable $400,000 Accounts Payable $200,000 Merchandise inventory $200.000 Short Term Loan $10,000 Merchandise Inventory $1,000,000 Short Term Loan $10.000 $15,000 Total Current abilities $160,000 Cash $10,000 Total Current Liabilities $210,000 Other Current Assets $2.000 Other Current Assets $3.000 Total Current Assets Long Term Liabilities Total Current Assets Long Term Liabilities Mortgage $80.000 Mortgage $40,000 Fixed Assets Bonds $3.500 Fixed Assets Bonds $2,800 Building $100,000 Total Long Term Liabilitle $83,500 Building $225,000 Total Long Term Liabilitie $42,800 Equipment $20,000 Equipment 595,000 Other Fixed Assets $3,000 Total Liabilities $243,500 Other Fixed Assets $15,000 Total abilities $282,800 Depreciation som Depreciation -$10,000 Total Fixed Assets Owners Equity Total Fixed Assets Owners Equity Owners Equity $138,500 Owners Equity $1,485,200 Total Assets Total Liabilities and Owners' Equity $382,000 Total Assets Total abilities and Owners' Equity $1,738,00 13P

Answer 1

Sales Revenue I Gross Profit focoon ISS,ooo COGS $600,000 Net Ienione $19soo SRA Expenses $ 120,000 T- Operating Profit mangen PSO Cost $125,000 salu Revenue $755,000 Financing Expenses Return $5,000 Assets Taxes @354. te 500 4.894 TAC Recenable sales Revenue $755,000 $50,000 Assets Turnover T: 87 'Curent Assets $287000 Inventory $200,000 Total Assets $402,000 Cash $ 35,000 fixed Assets $115,000 other CA $ 2ooo

I Sales Revenue $1290000 Gross Proft $ 400,000 COGS $850,000 Net Income $187525 Rroft manger 14.5-) T. Operating SL A Expenses $145000 cart $151.500 Isales Revenue Farm DIR-2 $1390,000 Deturn financing Exp. $6,500 Tares @ 351 $100975 Х Assets 20.7.- 1 Alc Rereinable sales Revenue $ 400,000 $1,290,000 Assets Turnover Current Assets 0. 74 Inventory $1413000 Total Assets $1,000,000 $1,738,000 fixed Assets Cash $10,000 $325,000 Other CA $3000

Average Inventory $100,000+ $125,000 + $ 105,000 + $95.000 $106,250 COGS Inventory turnover = Average Inventory - 0 $16,85 Irodo, bog $1,200,000 $106,250 11:29
Advantages of high turnover:

1. Increase sales presence.

2.Increase brand awareness.

3. Established customer base.

4. Larger sales staff.

Disadvantages of too high turnover:

1. Incentive Connection

2. Flexibility

3. Resistance

4. No adjustment for marketing conditions.