Investing $2,000,000 in TQM's Channel Support Systems initiative will at a minimum increase demand for your products 1.7% in this and in all future rounds. (Refer to the TQM Initiative worksheet in the CompXM.xls Decisions menu.) Looking at the Round 0 Inquirer for Andrews, last year's sales were $163,405,682. Assuming similar sales next year, the 1.7% increase in demand will provide $2,777,897 of additional revenue. With the overall contribution margin of 34.1%, after direct costs this revenue will add $947,263 to the bottom line. For simplicity, assume that the demand increase and margins will remain at last year's levels. How long will it take to achieve payback on the initial $2,000,000 TQM investment, rounded to the nearest month?

Andrews 12.3% ROS Asset Turnover 1.32 ROA 16.3% Leverage (Assets/Equity) 1.7 28.3% ROE $0 Emergency Loan $163,405,682 Sales EBIT $36,465,763 $20,139,267 Profits $0 Cumulative Profit SG&A /Sales 7.9% Contrib. Margin 34.1% Percent of Sales 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Chester Andrews Baldwin Baldwin 5.7% 0.91 5.2% 2.7 13.7% $0 $131,627,447 $21,737,197 $7,499,948 $0 9.7% 33.8% O Profit O Other O SGA O Depr O Var Costs Chester Digby 8.6% 9.2% 0.94. 1.27 8.1% 11.8% 2.4 1.9 19.2% 22.4% $0 $0 $118,809,302 $119,585,004 $23,745,048 $21,603,263 $10,189,632 $11,056,951 $0 $0 10.3% 11.2% 33.3% 38.8% Market Share Andrews 30.63 Baldwin 24.68 Chester 22.27% 22.42 Diab