If the airplane company wants to make a profit

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Reference no: EM131026408

Break Even Analysis (Remember your Algebra!!)

An airline company has Fixed Costs of $100 million and Variable Costs Per Unit of $2 million. Planes sell for $3 million each. What is the company’s breakeven point in terms of number of planes that need to be sold to break even?

1. If the airplane company wants to make a profit of $99 million annually, how many planes will it have to sell?

2. If the company can sell 200 planes in a year, how much annual profit will the form make?

2. I am an investor and I want to get into an industry. Problem is, I cannot decide which I’d rather invest in. Utilizing the financial data below analyze and compare the 2 years of data provided. Please use that information to advise me as to which company is in a better position…

BE DESCRIPTIVE AND SPECIFIC

GRADING SUMMARY:

1 Point for EACH financial ratio (60 Points total)

Working Capital

Current Ratio

Quick Ratio

Debt to Total Assets Ratio

Gross Profit Margin

Return on Total Assets (ROA)

Analysis of financial ratios (25 Points)

Break Even Analysis (15 Points)

Company A

In Millions

     

FINANCIAL INPUT

2010

2009

 

Net Income

$528

$555

 

Total Debt

$6,400

$5,589

 

Total Assets

$8,859

$8,776

 

Sales

$5,636

$5,531

 

Cogs

$2,243

$2,234

 

Current Assets

$1,309

$1,279

 

Current Liabilities

$1,338

$854

 

Inventory

$244

$262

 

Company B

In Millions

FINANCIAL INPUT

2010

2009

Net Income

$4,313

$3,609

Total Debt

$31,687

$29,383

Total Assets

$69,206

$63,117

Sales

$38,063

$36,149

Cogs

$31,337

$30,452

Current Assets

$12,225

$11,889

Current Liabilities

$11,000

$8,934

Inventory

$1,442

$1,271

PROFITABILITY RATIOS

     

Return on Assets (ROA)

=

Net Income

 

Total Assets

 
       
       
       

Gross Profit Margin

=

Sales - CoGS

 

Sales

 
       
       
       

LIQUIDITY RATIOS

     

Current Ratio

=

Current Assets

 

Current Liabilities

 
       
       
       
       

Quick Ratio

=

Current Assets - Inventory

Current Liabilities

       
       

Working Capital

=

Current Assets - Current Liabilities

Reference no: EM131026408

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