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Scenario: Backpacking USA Inc, manufactures a top-of-the-line camping tent. You are starting an internship as an assistant to the chief financial officer (CFO) of the
Scenario: Backpacking USA Inc, manufactures a top-of-the-line camping tent. You are starting an internship as an assistant to the chief financial officer (CFO) of the company, and the owner (Tom Dickinson) wants a current picture of the business and the financial risks with which his company must deal. The CFO has asked you to prepare an analysis for his meeting with Tom Dickinson in two days. Note: I must be able to click on a cell containing a computed value and see the formula/function used to determine its value. If the cell contains only a typed value, no credit will be earned. The previous intern, who left unexpectedly, put together the following data regarding the structure of the company Output level Assets Asset turnover Operating return on assets Degree of operating leverage Gross profits / EBIT Interest expense Marginal tax rate 130,000 units $ 7,500,000 9 times 45% 8 times S 670,000 28 % The CFO has instructed you to prepare the income statement but you only have the information from the previous intem and there is not enough time to collect additional information. However, using your knowledge of financial analysis, you devise a sequence of calculations that will AGBS 130 - Page 2 determine the values needed to prepare the income statement (follow the securence below). The CFO requires that you show the supporting calculations to demonstrate how you constructed the income statement and so he may review your work before the meeting. A. Calculate the values for the items below, ensuring that you proceed step-by-step. (8 points I point each) 1. Compute operating profit margin. 2. Compute sales revenue. 3. Compute EBIT 4. Compute revenue before fixed costs (gross profits). 5. Compute total variable costs. 6. Compute total fixed costs. 7. Compute the selling price per unit. 8. Compute the variable cost per unit. B. Calculate the break-even number of units for the company. (1 point) C. Prepare the income statement for the company. (9 points - 1 point for each line item) Please use this income statement template: Sales revenue - COGS Gross profits - Operating expenses Operating camings (EBIT) - Interest expense Taxable camins (EBT) - Taxes Net income
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