Question

14. What is company's margin of safety in units for projected Year 16? 15. What is the company's margin of safety as a percentage for projected Year 16? not for the projected Year 16 relative to Year 15 and 16. Is the margin of safety as a percentage improving or by how much? Eoxtrot Manufacturing Company, LLC Functional Format Income Statement Latest Operating Year Proforma for Year Year 15 15% Next Operating 16% ear 16 a units sold Average price per unit Sales revenue 100,000 $10,00 0,000 600,000 400,000 110,000 Less: cost of goods sold 100% s1,1 11,000 | 100% 650,000 Gross margin Less: marketing & selling expenses 461 ,00 240,000 80,000 141,000 9,380 40.0% 4 1 ,49% Less: general & administrative ex Net operating income Less: other expenses (interest) 70,000 100,000 Net income before taxes Less: allowance for income taxes Net income after taxes 89,780 29,627 39,486 $60, 1531 S92, 1 34-2929% 6.0153% Foxtrot Manufacturing Company, LLC Latest Operating Proforma for Selected Data from the Contribution Format Year 15 Income Statement Next Operating Year 16 550,000 Variable expenses Fixed expenses $500,000 S400,000 $420,000 Proforma for Year |Next Operating Foxtrot Manufacturing Company, LLC Latest Operating Year Fair Market Value Balance Sheets-Year End Year 15 15% 116% Year 16 120,000 Cash Short term securities Accounts receivable nvent Total: current assets S110,000 $75,000 100,000 80,000 300,000 300,000 Fixed assets Other/intangible assets Total assets $600,000 Accounts payable Notes payable Total liabilities 100,000 140,000 240,000 105,000 128,000 233,000 360,000 $600,000 Total liabilities & equity Page 4 of 6 Foxtrot Manufacturing Company LLC Cash Flow Statement Latest Operating Proforma for Next Year 15 Operating Year 16 Operating Activities Net Income Depreciation Other non-cash expenses Increase/decrease in accounts receivable Increase/decrease in inventories Increase/decrease in accounts payable $92,134 30,000 30,000 0 Subtotal: Net Cash from Operating Activities Long-term Investing Activities Purchase or sale of fixed assets Subtotal:Net Cash Used in Investing Activities 0 0 Financing Activities Increase/decrease in notes payable Increase/decrease in bonds outstanding -12,000 -12,000 0 0 0 -12,000 0 0 -12,000 Sale or repurchase of stock Subtotal: Net Cash from Financing Activities Summary Net Increase in Cash Cash & Equivalents at the Beginning of the Year Total: Cash & Equivalents at the End of the Year

Answer 1