Camping USA Inc. has only been operating for 2 years in the outskirts of Albuquerque, New Mexico, and is a new manufacturer of a top-of-the-line camping tent. You are starting an internship as assistant to the chief financial officer of the company, and the owner and CEO, Tom Charles, has decided that this is the right time to know more about the business and financial risks his company must deal with. For this, the CFO has asked you to prepare an analysis to support him in his next meeting with Tom Charles a week from today.To make the required calculations, you have put together the following data regarding the cost structure of the company:Output level120,000 unitsOperating assets$6,000,000Operating asset turnover12 timesReturn on operating assets48%Degree of operating leverage10 timesInterest expense$720,000Tax rate42%The CFO has instructed you to first determine the break-even point in units of output for the company. He requires that you prepare supporting documents, which demonstrate how you arrived at your conclusion and can facilitate his review of your work. Accordingly, you are required to have the information needed to prepare an analytical income statement for the company to be presented to the CFO. In a format that is acceptable for a meeting discussion with the CEO, you also need to prepare answers to the following questions:a. What is the firm’s break-even point in sales dollars?b. If sales should increase by 40 percent, by what percentage would EBT (earnings before taxes) and net income increase?c. Prepare another income statement, this time to verify the calculations from part d.(Keown. Foundations of Finance: The Logic and Practice of Financial Management, 6th Edition. Pearson Learning Solutions pp. 412 - 413).
HiCustomerbr/>Welcome to JA. I can help you with your question. It look some part of the question is missing. part c & d .Also please let me know you deadline for this question.RegardsLinda
Hi Linda this is all of question "c" in my text book... c. Prepare another income statement, this time to verify the calculations from part d.
c. Prepare another income statement, this time to verify the calculations from part d.
the deadline is tonight byn midnight i am not sure what or where part d comes into play
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Relist: Answer quality. In Mini Case 2, part c should read." <strong>c.</strong> Prepare another income statement, this time to verify the calculations from part b." There is a typo in the printed text that refers to part d (but there is no part d it should be part b).
The solution is correct. It is only that the excel template provided on the book's website is confusing. I will post a simpler version