Accounting Analysis

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Accounting Analysis


Year

Sale Volume

1

$ 70,000

2

$ 80,000

3

$ 100,000

4

$ 85,000

5

$ 75,000

PDA

Prototype

$ 8,500,000

Marketing

$ 2,500,000

Selling Price

$ 250

Variable Cost

$ 86

Fixed Cost

$ 2.4 million per year

Machine Cost

$ 10,000,000

First Year

Sales

Less: Variable

70,000 6,020,000

Fixed Cost

Net Income before tax

Less: Tax

Net Income after tax

$ 5,448,000

Depreciation Expenses 

Cash Flow

$ 7,448,000

Second Year

Sales

80,000  20,000,000

Less: Variable

80,000

Fixed Cost

2,400,000

Net Income before tax

Less: Tax

Net Income after tax

$ 6,432,000

Depreciation Expenses

Cash Flow

$ 8,432,000

Third Year

Sales

100,000  25,000,000

Less: Variable

Fixed Cost

2,400,000

Net Income before tax

Less: Tax

$ 5,600,000

Net Income after tax

8,400,000

Depreciation Expenses

Cash Flow

$ 10,400,000

Fourth Year

Sales

85,000

Less: Variable

85,000  7,310,000

Fixed Cost

2,400,000

Net Income before tax

Less: Tax

Net Income after tax

$ 6,924,000

Depreciation Expenses

Cash Flow

$ 8,924,000

Fifth Year

Sales

75.000  18,750,000

Less: Variable

 6,450,000

Fixed Cost

2,400,000

Net Income before tax

Less: Tax

Net Income after tax

$ 5,940,000

Depreciation Expenses 

Cash Flow

$ 7,940,000

Year

Cash Flow

1

$ 7,448,000

2

$ 8,432,000

3

$ 10,400,000

4

$ 8,924,000

5

$ 7,940,000

 

Pitfalls of using playback Period

It has insufficient genuine certainties, which pick the length of best payback period? Nobody from different does – it is arranged by setting one venture opportunity against an alternate. Money streams are viewed as either prepay back or post-payback, however the last have a tendency to be disregarded. Payback makes no note of the impact on business benefit. Its sole concern is money stream.

The genuine downside of payback period is it doesn’t depend on the period estimation.............


Type: Essay || Words: 1893 Rating || Excellent

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