4+ < Uber's financial statements for the year ended Dec 31 2020 showed a loss of $6.7 billion on sales of 11.1 billion. Some analysts were quick to blame Covid-19 for this loss, while many analysts pointed to other issues and reminded investors that Uber also lost money if years prior to Covid- 19. For example, 2019 showed a loss of $8.5 billion on sales of $13 billion. < UBER TECHNOLOGIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except share amounts which are reflected in thousands, and per share amounts) Revenue Year Ended December 31, 2018 2019) 10,433 $ 13,000 $ 2020 11,139 Costs and expenses Cost of revenue, exclusive of depreciation and amortization shown separately below 4,786 6,061 5,154 Operations and support Sales and marketing Research and development 1,516 2,302 1,819 3,151 4,626 3,583 1,505 4,836 2,205 General and administrative 2,082 3,299 2,666 Depreciation and amortization Total costs and expenses Loss from operations Interest expense Other income (expense), net Income (loss) before income taxes and loss from equity method investments Provision for (benefit from) income taxes Loss from equity method investments Net income (loss) including non-controlling interests Less: net loss attributable to non-controlling interests, net of tax Net income (loss) attributable to Uber Technologies, Inc. 426 472 575 13,466 21,596 16,002 (3,033) (8,596) (4,863) (648) (559) (458) 4,993 722 (1.625) 1,312 (8,433) (6,946) 283 45 (192) (42) (34) (34) 987 (8.512) (6,788) (10) (6) (20) 997 $ (8,506) $ (6,768) Net income (loss) per share attributable to Uber Technologies, Inc. common stockholders: Basic $ (6.81) $ (3.86) Diluted (6.81) $ (3.86) Weighted average shares used to compute net income (loss) per share attributable to common stockholders: Basic Diluted 443,368 478,999 1,248,353 1,248,353 1,752,960 1,752,960 For simplicity purposes, assume the following about Uber's cost structure: Cost of Sales and Operations and support are all variable, and all of the other costs are fixed (Sales and Marketing, R+D all fixed, General and admin, Depreciation and Amortization). As well, ignore items such as interest expense, other income/expenses, income taxes, gains/losses on equity method investments, and issues related to minority interests. < < Assume that fixed costs remain constant for parts A and B. (You can ignore 2018 and 2019) < < A. What is the break-even point in terms of sales? What percentage would Uber have to increase sales in order to break even? < B. Suppose Uber feels that the maximum size of its customer based is $19 billion in sales. What percentage would variable costs have to decrease (in other words, compare the current % variable costs with the amount required) in order for Uber to make a pre-tax profit of 10% of sales? (assume that fixed costs remain the same)? < C. Do you think investors will ever see a return on their investment? (see attached article). [Hint: There is no right or wrong answer to this type of question. When a question like this asks for your opinion, the question is really asking you for a balanced analysis that includes reasons for/against or pros/cons and a conclusion that is based on the analysis. Analysis is more than restating case fact; analysis means explaining why something is significant]