Operating Leverage and Forecasting Problems Team Assignment\tPlease complete the following problems.\u00a0 When calculating earnings per share and PE ratios, please show your work.\u00a0 This problem is similar to the examples shown in the lecture.\t\t\tYou manufacture hunting pack systems in China for 80 dollars each, including shipping.\u00a0 The manufacturing costs only include variable costs.\u00a0 Variable costs are not calculated as a percentage of sales in this case.\u00a0\u00a0 Sales\u00a0 are a function of the number of packs sold and the price per pack. Likewise, variable costs are a function of the number of packs sold and the cost to produce each pack. You sell these packs to retailers for 200 dollars each.\u00a0 In the current year you will sell 100,000 packs.\u00a0 Your fixed costs including such items as insurance, marketing, travel, shows, office supplies, warehouse rentals etc. totals 5 million dollars this year and are not part of the 80 dollars per pack manufacturing cost.\u00a0 The federal income tax rate for your company is 40 percent.\u00a0\tYour company is publicly traded on the NASDAQ with 1,000,000 shares outstanding.\u00a0\t\t\tPlease create a current income statement using the same format as found in the lecture.\u00a0\u00a0\u00a0 (5 points)\t\t\tPlease calculate earnings per share. (2 points)\t\t\tPlease calculate the price\/earnings multiple assuming that the current stock price is 10 dollars per share.\u00a0 (2 points) \ufffd \ufffd \ufffd\u00a0\u00a0\u00a0\t\t\tCreate a two-year forecast of the income statement from the information provided in problem number one.\u00a0 Please create three columns of data:\u00a0 current year, year 2, and year 3.\u00a0 Assume that sales increase ten percent per year for year’s two and three.\u00a0 Please show the earnings per share for each of the three years.\u00a0 (10 points)\u00a0\t \ufffd\u00a0 3.\u00a0 Please estimate the stock price for year’s two and three, assuming that the current PE multiple remains constant for each of the two forecasted years.\u00a0 (6 points)<\/p>\n","protected":false},"excerpt":{"rendered":"
Operating Leverage and Forecasting Problems Team Assignment Please complete the following problems.\u00a0 When calculating earnings per share and PE ratios, please show your work.\u00a0 This problem is similar to the examples shown in the lecture. You manufacture hunting pack systems Read More …<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-217047","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/217047","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/comments?post=217047"}],"version-history":[{"count":0,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/217047\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/media?parent=217047"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/categories?post=217047"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/tags?post=217047"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}