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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%

    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?

    © BrainMass Inc. brainmass.com December 24, 2021, 7:57 pm ad1c9bdddf
    https://brainmass.com/business/business-math/estimating-sales-profit-after-tax-233489

    SOLUTION This solution is FREE courtesy of BrainMass!

    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 sales*average selling price
    =$2*300 million
    =$600 million

    b) What is your estimate of 2008 profits after tax?

    Sale Revenue =$600 million
    Total expenses=60% of sales
    =$600*60% million
    =$360 million
    Operating Profit= Sale Revenue-Total expenses
    =600-360 =$240 million
    Tax liability = 50% of operating profit
    =240*50% =$120 million

    Profit after tax=240-120=$120 million

    c) What is the percentage increase in 2008 profits after tax vs 2007 profit after tax of $110 Million?

    After tax profit in 2007=$110 million
    After tax profit in 2008=$120 million
    % increase in profit =(120-110)/110=9.09%

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    © BrainMass Inc. brainmass.com December 24, 2021, 7:57 pm ad1c9bdddf>
    https://brainmass.com/business/business-math/estimating-sales-profit-after-tax-233489

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