Problem 2: What if & ratios ratios Below is a base year scenario In columns Dto F are assumptions for two possible scenarios for the following year. Calculate time interest earned Calculate Coverage of interest and debt Calculate AR balance each year using days sales assumptions, 360 day year, all sales on credit Answer here 2xxx 2xx1 Projextions 2xx1 Assumptions Initial Conservative 10% 5% Initial Conservative Revenue growth Margins down Commissions as % of sales Growth of OPEX -3.00% 5% 8.0% -5.00% 6% 3.0% Base Year Sales Cogs 45% Gross Margin Commissions OPEX EBIT Interest EBT Taxes Net Income Debt Repayment X interest earned Earnings Coverage of Interest & principal 3,200 1,440 1,760 160 1,060 540 40 500 200 300 150 Interest with diff. rates 42 44 42 44 Sales Cogs Gross Margin Commissions OPEX EBIT Interest EBT Taxes (40%) Net Income Debt Repayment X interest earned Earnings Coverage of Interest & principal Tax rate 40% 40% 200 200 200 200 Debt Repayment X interest earned Earnings Coverage of Interest & principal Days sales 62 Days sales 62 75 75 AR balance AR balance

Problem 2: What if \& ratios ratios Below is a base year scenario In columns D to F are assumptions for two possible scenarios for the following year. Calculate time interest earned Calculate Coverage of interest and debt Calculate AR balance each year using days sales assumptions, 360 day year, all sales on credit \begin{tabular}{|c|c|c|c|c|c|c|c|} \hline & & & & & & swer here & \\ \hline & 2xx & 2x1 & Assu & Imptions & Projextions 2xx1 & & \\ \hline Base Year & & & Initial & Conservative & & Initial & Conservative \\ \hline Sales & 3,200 & Revenue growth & 10% & 5% & Sales & & \\ \hline Cogs 45% & 1,440 & & & & Cogs & & \\ \hline Gross Margin & 1,760 & Margins down & 3.00% & 5.00% & Gross Margin & & \\ \hline Commissions & 160 & Commissions as % of sales & 5% & 6% & Commissions & & \\ \hline OPEX & 1,060 & Growth of OPEX & 8.0% & 3.0% & OPEX & & \\ \hline EBIT & 540 & & & & EBIT & & \\ \hline Interest & 40 & Interest with diff. rates & 42 & 44 & Interest & 42 & 44 \\ \hline EBT & 500 & & & & EBT & & \\ \hline Taxes & 200 & Tax rate & 40% & 40% & Taxes (40\%) & & \\ \hline Net Income & 300 & & & & Net Income & & \\ \hline Debt Repayment & 150 & Debt Repayment & 200 & 200 & Debt Repayment & 200 & 200 \\ \hline X interest earned & & X interest earned & & & X interest earned & & \\ \hline Earnings Coverage of & & Earnings Coverage of & & & Earnings Coverage of & & \\ \hline Interest \& principal & & Interest \& principal & & & Interest \& principal & & \\ \hline & & & & & & & \\ \hline & & & Day & ys sales & & Days s & sales \\ \hline & & & 62 & 75 & & 62 & 75 \\ \hline & & AR balance & & & AR balance & & \\ \hline \end{tabular}