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Please help with the question with explanations in the spreadsheet, such as any necessary calculations. Company X is currently a brick and click business model.
Please help with the question with explanations in the spreadsheet, such as any necessary calculations.
Company X is currently a "brick and click business model. They have retail stores and an online store. Retail store sales have been shrinking. The CFO has projected that given current trends they will be unprofitable in 4 years. The management team is considering shutting down stores and becoming an on-line only business. Given the assumptions below what year will becoming an online only business generate greater profits? Assume: Retail Store sales are declining (-$100,000 per year) If you close the store, 25% of the store sales will migrate to e-commerce E-commerce SG&A can be managed to 25% of sales Current Projections Store sales $ e-commerce sales $ Total Sales $ Gross Margin % Gross Margin $ $ SG&A $ EBIT | $ 2022 2021 2020 2019 800,000 $ 900,000 $ 1,000,000 $ 1,100,000 180,000 $ 175,000 $ 170,000 $ 165,000 982,020 $ 1,077,019 $ 1,172,018 $ 1,267,017 42.0% 42.0% 42.0% 42.0% 412,448 $ 452,348 $ 492,248 $ 532,147 463,050 $ 441,000 $ 420,000 $ 400,000 (50,602) $ 11,348 $ 72,248 $ 132,147 SG&A/sales 58% 49% 42% 36%Step by Step Solution
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