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Estimating Sales and Profit after tax

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%

Questions:

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?

Solution Preview

Solution:

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.

$2.19