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In-Class Assignment #1 19 INCOME STATEMENT % of SALES 100% 80,000,000.00 SALES $ 58.5% COGS 46,832,000.00 $ 41.5% GROSS PROFIT 33,168,000.00 $ OPERATING INCOME (EBITDA)
In-Class Assignment #1 19 INCOME STATEMENT % of SALES 100% 80,000,000.00 SALES $ 58.5% COGS 46,832,000.00 $ 41.5% GROSS PROFIT 33,168,000.00 $ OPERATING INCOME (EBITDA) $ 34.5% OPERATING EXPENSES 27,568,000.00 7.0% 5,600,000.00 Please give an example of an industry that would be well-suited to de-centralized purchasing, along with a 2-3 sentence explanation of why. Your firm wants to increase OPERATING INCOME by $3m this year. If sales are consistent, by how much will you need to reduce cost of goods sold to achieve this goal? Under this scenario, what are COGS as a percentage of sales? If you go the other way and try to add $3M to the bottom line by increasing sales instead, by how much would sales need to increase to achieve this goal? Remember that COGS and OPERATING EXPENSES will continue to be 58.5% and 34.5% of SALES respectively. 1. 2. Which of these two options seems more feasible? 3
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