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Unformatted text preview: variable costs of the expensive clubs are an inflow. If we are not producing the sets any more, we will save these variable costs, which is an inflow. So: Var. costs New clubs $320 55,000 = $17,600,000 Exp. clubs $600 ( 13,000) = 7,800,000 Cheap clubs $180 10,000 = 1,800,000 $11,600,000 The pro forma income statement will be: Sales $28,200,000 Variable costs 11,600,000 Fixed costs 7,500,000 Depreciation 2,600,000 EBT 6,500,000 Taxes 2,600,000 Net income $ 3,900,000 Using the bottom up OCF calculation, we get: OCF = NI + Depreciation = $3,900,000 + 2,600,000 OCF = $6,500,000...
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This note was uploaded on 02/26/2012 for the course MBA IT DOM1 taught by Professor Kviswanathan during the Spring '12 term at Indian Institute of Technology, Chennai.
- Spring '12