Question

Calculate the following based on 2018 numbers using the attached financial statements for XYZ Corp. Assume the only variable cost is the cost of goods sold.

1. Survival revenues (EBITDA breakeven – includes interest).
2. B.NOPAT Breakeven

c) Interpret these values and indicate what you would expect to happen to them if a large addition is made to fixed assets.

Financial Statements for XYZ Corp.

Balance Sheet for Period Ending December 31.

Assets	2017	2018
Cash and Marketable Securities	40	15
Accounts Receivable	160	80
Inventories	250	370
Total Current Assets	450	465
Gross Plant and Equipment	675	855
less: Accumulated Depreciation	250	300
Net Plant and Equipment	425	555
Total Assets	875	1020
Liabilities and Equity
Accounts Payable	15	30
Short-term Bank Loans	35	40
Accrued Liabilities	55	60
Total Current Liabilities	105	130
Long-Term Debt	265	360
Common Stock	180	180
Retained Earnings	325	350
Total Equity	505	530
Total Liabilities and Equity	875	1020

Income Statement for the Period Ending December 31.

	2018
Sales	1500
Cost of Goods Sold	1272
Gross Profit Margin	228
Administrative Expense	40
Marketing Expense	30
Research and Development	20
Depreciation	50
Earnings before Interest and Taxes	88
Interest Expense	39
Income before Taxes	49
Income Taxes @ 40%	20
Net Income	29

Answer 1