Break Even Analysis (Remember your Algebra!!)

An airline company has Fixed Costs of $100 million and Variable Costs Per Unit of $2 million. Planes sell for $3 million each. What is the companys breakeven point in terms of number of planes that need to be sold to break even?

If the airplane company wants to make a profit of $99 million annually, how many planes will it have to sell?

If the company can sell 200 planes in a year, how much annual profit will the form make?

2. I am an investor and I want to get into an industry. Problem is, I cannot decide which Id rather invest in. Utilizing the financial data below analyze and compare the 2 years of data provided. Please use that information to advise me as to which company is in a better position

BE DESCRIPTIVE AND SPECIFIC

GRADING SUMMARY:

1 Point for EACH financial ratio (60 Points total)

Working Capital

Current Ratio

Quick Ratio

Debt to Total Assets Ratio

Gross Profit Margin

Return on Total Assets (ROA)

Analysis of financial ratios (25 Points)

Break Even Analysis (15 Points)

Company A
In Millions
FINANCIAL INPUT	2010	2009
Net Income	$528	$555
Total Debt	$6,400	$5,589
Total Assets	$8,859	$8,776
Sales	$5,636	$5,531
Cogs	$2,243	$2,234
Current Assets	$1,309	$1,279
Current Liabilities	$1,338	$854
Inventory	$244	$262

Company B
In Millions FINANCIAL INPUT	2010	2009
Net Income	$4,313	$3,609
Total Debt	$31,687	$29,383
Total Assets	$69,206	$63,117
Sales	$38,063	$36,149
Cogs	$31,337	$30,452
Current Assets	$12,225	$11,889
Current Liabilities	$11,000	$8,934
Inventory	$1,442	$1,271

PROFITABILITY RATIOS
Return on Assets (ROA)	=	Net Income
		Total Assets
Gross Profit Margin	=	Sales - CoGS
		Sales
LIQUIDITY RATIOS
Current Ratio	=	Current Assets
		Current Liabilities
Quick Ratio	=	Current Assets - Inventory
		Current Liabilities
Working Capital	=	Current Assets - Current Liabilities
DEBT MANAGEMENT
Debt Ratio	=	Total Debt
		Total Assets