Gina in Texas
New member
Sam’s Appliance has just completed the first year of operation for his business and has the following information: sales, $200,000; cost of goods sold, $140,000; rent, $18,000; utilities, $8,400; insurance, $2,000; depreciation on equipment, $3,500; and interest, $10,000. Your forecast indicates that your sales will increase by 20%. Your rental agreement provides for a 3 increase percent per year. Sam has just read an article indicating that utility costs in his area will increase by 10% next year. Also, Sam just received a notice from his insurance company stating that his quarterly premium will increase to $600 beginning the first quarter of next year. The depreciation expense on the equipment will not change; however, Sam’s loan amortization schedule indicates that interest expense next year will be $9,000.
I calculated Net Profit to be $48,000 in current year and $65,320 for the projected next year.
1. By what percentage did Sam’s net income change?
I calculated the percentage of change to be 36.0835%. Is this correct?
2. What is the current profit margin and the pro forma profit margin?
Thanks!
I calculated Net Profit to be $48,000 in current year and $65,320 for the projected next year.
1. By what percentage did Sam’s net income change?
I calculated the percentage of change to be 36.0835%. Is this correct?
2. What is the current profit margin and the pro forma profit margin?
Thanks!