Ch09_SSol - Problem 9.1 Carlton Germany: Case 4 Carleton...

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Problem 9.1 Carlton Germany: Case 4 Balance Sheet Information, End of Fiscal 2005 Assets Liabilities and net worth Cash € 1,600,000 Accounts payable € 800,000 Accounts receivable 3,200,000 Short-term bank loan 1,600,000 Inventory 2,400,000 Long-term debt 1,600,000 Net plant and equipment 4,800,000 Common stock 1,800,000 Retained earnings 6,200,000 Sum € 12,000,000 Sum € 12,000,000 Important Ratios to be Maintained and Other Data Accounts receivable, as percent of sales 25.00% Inventory, as percent of annual direct costs 25.00% Cost of capital (annual discount rate) 20.00% Income tax rate 34.00% Base Case Case 1 Case 2 Case 3 Case 4 Assumptions Exchange rate, $/€ 1.2000 1.0000 1.0000 1.0000 1.0000 Sales volume (units) 1,000,000 1,000,000 2,000,000 1,000,000 500,000 Export sales volume (case 4) 500,000 Sales price per unit € 12.80 € 12.80 € 12.80 € 15.36 € 12.80 Export sales price per unit (case 4) € 15.36 Direct cost per unit € 9.60 € 9.60 € 9.60 € 9.60 € 9.60 Annual Cash Flows before Adjustments Sales revenue € 12,800,000 € 12,800,000 € 25,600,000 € 15,360,000 € 14,080,000 Direct cost of goods sold 9,600,000 9,600,000 19,200,000 9,600,000 9,600,000 Cash operating expenses (fixed) 890,000 890,000 890,000 890,000 890,000 Depreciation 600,000 600,000 600,000 600,000 600,000 Pretax profit € 1,710,000 € 1,710,000 € 4,910,000 € 4,270,000 € 2,990,000 Income tax expense 581,400 581,400 1,669,400 1,451,800
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This note was uploaded on 07/27/2011 for the course ECON 101 taught by Professor Dr. during the Spring '11 term at Columbia Union.

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Ch09_SSol - Problem 9.1 Carlton Germany: Case 4 Carleton...

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