3.1.1 Solutions_Lecture_05_2009

3.1.1 Solutions_Lecture_05_2009 - Solution to Problem 1: S...

Info iconThis preview shows pages 1–10. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Solution to Problem 1: S −VC $8m− $1.6m = ( a ) DOL= S − VC −F $8m−$1.6m−$2m $ 6 .4 m = $ 4 .4 m =1.455 ( b ) % Δ E B I T = D O L × % Δ S a le s = 1.4 5 5 × 1 0 % = 1 4 .5 5 % 1 Looking at the same problem with an income statement approach Units Sales Rev. F VC E BIT 40 000 8 000 000 2 000 000 1 600 000 4 400 000 44 000 8 800 000 2 000 000 1 7 60 000 5 0 40 000 5 0 40 000 / 4 400 000 = 1.1455 2 Solution to Problem 2: Llama Co’s DOL S −VC $20m− $6m = (a ) DOL= S − VC −F $20m−$6m−$4m $14m = $10m = 1.4 3 Llama Co continued (a)(ii) Sales $20m Less VC $ 6m Less F $ 4m EBIT $10m Percentage Δ EBIT = 1.4 × (-20%) EBIT = -28% New EBIT = $10m(1-0.28) = $7.2m (b) 4 Llama Co contintued (b)(ii) Sales @ $20m × (1-0.2) (1 VC @ $6m × (1-0.2) (1 F remains unchanged $16.0m $ 4.8m $ 4.0m $ 7.2m EBIT EBIT Check: (7.2m - 10m)/10m = -0.28 5 Solution to Problem 3: EBIT $4.4 m = ( a ) DFL = EBIT − I $4.4 m − $1m = 1.294 (b ) % Δ NPAT = DFL × % Δ EBIT = 1.294 × 10% = 12.94% 6 Current + 10% EBIT EBIT Less I NPBT Less Tax NPAT 4 400 000 3 400 000 2 040 000 4 840 000 3 840 000 2 3 04 000 -1 000 0 00 -1 000 0 00 -1 360 000 -1 536 000 2 304 000 / 2 040 000 = 11294 . 7 Solution to Problem 4: ( a ) D TL = D OL × D FL = 1.455 × 1.294 = 1.882 (b ) % Δ NPAT = DTL × % Δ Sales = 1.882 × 10% = 18.82% 8 Proof (part 1): Units Sales Rev. Less F Less VC EBIT 40 000 8 000 000 -2 000 000 -1 600 000 4 400 000 44 000 8 800 000 -2 000 000 -1 760 000 5 040 000 9 Proof continued: EBIT Less I NPBT Less Tax NPAT 4 400 000 -1 000 000 3 400 000 -1 360 000 2 040 000 5 040 000 -1 000 000 4 040 000 -1 616 000 2 424 000 2 424 000 / 2 040 000 = 1.1882 10 10 ...
View Full Document

This note was uploaded on 12/23/2009 for the course BCOM FINC 202 taught by Professor Warwickanderson during the Spring '09 term at Canterbury.

Page1 / 10

3.1.1 Solutions_Lecture_05_2009 - Solution to Problem 1: S...

This preview shows document pages 1 - 10. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online