Refer to the income statements in requirement 1 above. For both current operations and the proposed new operations, compute (a) the degree of operating leverage, (b) the break-even point in dollars, and (c) the margin of safety in both dollar and percentage terms.

A decrease in accounts payable constitutes a/an _________ in net working capital and is considered a/an __________ to a project. Select one: a. increase; cash inflow b. increase; cash outflow c. decrease; cash inflow d. decrease; cash outflow e. increase; opportunity cost

Residual income is the excess of operating income over the cost of capital associated with the deployed assets. Following is information for four segments. Experiment with alternative rates of the cost of capital by using the pick list choices associated with the boxed area. Note how the relative residual income changes between the units based on the interest rate assumption! What do you wish to assume for the interest rate? >>>> Operating income Operating assets Assumed interest rate Cost of Capital Residual income Segment A 1,200,000 8,000,000 X 0 1,200,000 Segment B 1,000,000 4,000,000 X 0 1,000,000 Segment C 750,000 2,000,000 X 0 750,000 0% Segment D 500,000 600,000 X 0 500,000

The simple model of finacnial planning assumes which of thr following: Only assest are expected to increase the same rate as the sales projection  The sales projextion is the inly thing expected to increase Assets liabilities equity and expenses are projected to increase at the same rate as the sales projections