class work problem

1. amount of money licensor invested in assets for that particular technology example 150 million dollars

2. sales license createdIn the latest 12 months. example 340 million

3. the profits before interest and taxes that were created for the licenses for the set technology in the last 12 months example 100 million

the top three pieces of information come from the income statement of the licensure the next two pieces of information come from the industry knowledge of the licenser

4. how much of the profit made solely because of licenses technology should rightfully belong to the licensor say 55%

5. how much is the profit made by any company which does not have any proprietary technology say 8%

, solving for the licensing fees as a percentage of sales revenue

1. return on invested capital is equal to profit/ assets.
2. The Profit made purely because of licenses technology.
3. The margin of profit that should rightfully go to the licensor of the profit made purely because of licenses fees is 55% so.
4. Sales/ assets ratio=.
5. Licensing fees as a percentage of sales revenue will then be equal to the answer of 3 above divided by the answer of 4 above =.

So the answer is 9% of sales revenue should be the licensing fees