Sales growth rates in each of next 3 years: 15%, 35%, 45% Operating expenses as % percentage of sales stays at 2022 level for 2023 then goes down by 1% in each of next two years (so, if was 20% in 2022, forecast levels would be .20, .19, .18) Cost of goods sold as % of sales stays at 2022 level for 2023 and then improves by .05 in 2024 and by another .03 in 2025 (remember, this is an expense, so improves means it goes down) 40% tax rate No dividends or new stock issued Interest expense fixed at $400 / year Bank loan and LT debt stay constant 2023 A/R days = year 2022 days, then decrease by 3 days in 2024 & another 3 days in 2025 2023 Inventory days = year 2022 days then decrease by 3 days in 2024 & another 3 days 2025 A/P days stays at year 2022 days Net fixed assets and accruals: Use 2022 % of sales for 2023-2025 Required cash fixed at 1000 Calculate Additional Funds Needed as plug (to get Balance Sheet to balance!) Calculate 2023 breakeven revenues and units. Assumptions: All operating expenses (excluding interest) are fixed Average price per unit is $60

- Sales growth rates in each of next 3 years: 15%,35%,45% - Operating expenses as \% percentage of sales stays at 2022 level for 2023 then goes down by 1% in each of next two years (so, if was 20% in 2022 , forecast levels would be .20,.19,.18 ) - Cost of goods sold as \% of sales stays at 2022 level for 2023 and then improves by .05 in 2024 and by another .03 in 2025 (remember, this is an expense, so improves means it goes down) - 40% tax rate - No dividends or new stock issued - Interest expense fixed at $400/ year - Bank loan and LT debt stay constant - 2023 A/R days = year 2022 days, then decrease by 3 days in 2024& another 3 days in 2025 - 2023 Inventory days = year 2022 days then decrease by 3 days in 2024 \& another 3 days 2025 - A/P days stays at year 2022 days - Net fixed assets and accruals: Use 2022% of sales for 2023-2025 - Required cash fixed at 1000 - Calculate Additional Funds Needed as plug (to get Balance Sheet to balancel) te 2023 breakeven revenues and units. tions: All operating expenses (excluding interest) are fixed Average price per unit is $60 3 4 Sales Growth \% of Current Sales 5 Average price per item 6 Cost of Goods Sold \% of Sales 7 Operating Expense % of Forecast Sales 8 Tax Rate % of EBT 9 Dividend Rate % of NI 10 Required Cash % of Forecast Sales 11 A/R days 12 Inventory Days 13 Net Fixed Assets \% of Forecast Sales 14 Days Payable 15 Accrued Liability \% of Forecast Sales 16 17 18 19 Net Sales Cost of Goods Sold Actual Gross Profit Operating exp Interest EBT Taxes (40\%) Net Income Assumptions (use these to drive projected IS and BS) \begin{tabular}{|l|r|r|} \hline 0.15 & 0.35 & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline \end{tabular} Cash Dividends ( 0% of NI) Added Retained Eamings 0 29 30 31 32 Balance Sheet Required Cash AVR Inventories Total Current-Assets Net Fixed Assets 1000 2000 2200 5200 6800 34 Inventories Total Current Assets Net Fixed Assets 2200 G H Total Assets 5200 6800 12000 Accounts Payable 1600 Bank Loan 1800 Accured Liability Total Current Liability 1200 Long Term Debt 4600 Common Stock 2200 Retained Earnings 2400 Additional Fund Total Liabity \& Equty (AFN) 0 BREAKEVEN CALCULATION Fined Costs Gross margin % BREAKEVEN REVENUES Price per unit BREAKEVEN UNITS