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    Estimating Sales and Profit after tax

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    The company is "Ties for U" and my boss wants to estimate profits for next year(2008) and then determine the percentage growth from 2007 to 2008.

    Some assumptions:
    - The marketing folk expect the total market for ties in 2008 to be 10 million ties.
    - The expect "Ties for U" to capture 20% of the market next year.(how many ties will "Ties for U" sell?)
    - The average selling price for "Ties for U" is $300.(now you can calculate the sales)
    - Total expenses(cost of goods, marketing etc) estimated to be 60% of sales.
    - Tax rate on profits is 50%


    What is your estimate for 2008 sales($)?
    What is your estimate of 2008 profits after tax?
    What is the percentage increase in 2008 profits after tax vs 2007 profit after tax of $110 Million?

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    Solution Preview


    a) What is your estimate for 2008 sales ($)?

    Total Market for ties= 10 millions units
    Target market share=20%
    Expected sales = 10*20% million ties
    =2 million ties

    Sale volume in $=Expected ...

    Solution Summary

    Solution describes the steps for estimating sales, after tax profits and percentage increase in after tax profits.