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Profitability Analysis Overview

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Ben Kairu
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10 views12 pages

Profitability Analysis Overview

Uploaded by

Ben Kairu
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd

Total depreciable capital 90 MM $

Production cost 100 MM $/yr Gross earnings = Sales Revenue - Pr


Working capital 40 MM $ 100
Capacity 90% $1.50 Income Tax = Tax Rate*Gr
Sales revenue $150 MM $/yr
Income tax rate 0.40
Nominal interest rate, r 15.00%
Compouding period, m 1.00 year

InvestmentWorking MACRS Depreciation Production Sales Gross Income


n fCTDC Capital Table D ($/yr) Costs Revenue Earnings Tax
1 ($30.00)
2 ($30.00)
3 ($30.00) ($40.00)
4 20.00% $18.00 $55.00 $75.00 $2.00 $0.80
5 32.00% $28.80 $78.00 $112.99 $6.19 $2.48
6 19.20% $17.28 $100.00 $150.00 $32.72 $13.09
7 11.52% $10.37 $100.00 $150.00 $39.63 $15.85
8 11.52% $10.37 $100.00 $150.00 $39.63 $15.85
9 5.76% $5.18 $100.00 $150.00 $44.82 $17.93
10 $100.00 $150.00 $50.00 $20.00
11 $100.00 $150.00 $50.00 $20.00
12 $100.00 $150.00 $50.00 $20.00
13 $100.00 $150.00 $50.00 $20.00
14 $100.00 $150.00 $50.00 $20.00
15 $40.00 $100.00 $150.00 $50.00 $20.00
rnings = Sales Revenue - Production Costs - Depreciation

Income Tax = Tax Rate*Gross Earnings

Net Earnings = Gross Earnings - Income Tax

Cash flow = Investment in TDC + Working Capital + Net Earnings + Depreciation

Net Cash Discount PV Cum PV


Earnings Flow Factor
($30.00) 1.00 ($30.00) ($30.00)
($30.00) 0.87 ($26.09) ($56.09)
($70.00) 0.76 ($52.93) ($109.02)
$1.20 $19.20 0.66 $12.62 ($96.39)
$3.72 $32.52 0.57 $18.59 ($77.80)
$19.63 $36.91 0.50 $18.35 ($59.45)
$23.78 $34.15 0.43 $14.76 ($44.69)
$23.78 $34.15 0.38 $12.84 ($31.85)
$26.89 $32.07 0.33 $10.48 ($21.36)
$30.00 $30.00 0.28 $8.53 ($12.84)
$30.00 $30.00 0.25 $7.42 ($5.42)
$30.00 $30.00 0.21 $6.45 $1.03
$30.00 $30.00 0.19 $5.61 $6.63
$30.00 $30.00 0.16 $4.88 $11.51
$30.00 $70.00 0.14 $9.89 $21.40 NPV

Cumulative PV =∑PV

Present Value (PV) = Discount Factor*Cash Flow

Discount Factor = 1/(1+ r/m)^n


Total depreciable capital 90 MM $
Production cost 100 MM $/yr Gross earnings = Sales Revenue - Pr
Working capital 40 MM $ 100
Capacity 90% $1.50 Income Tax = Tax Rate*Gr
Sales revenue $150 MM $/yr
Income tax rate 0.40
Nominal interest rate, r 18.50%
Compouding period, m 1.00 year

InvestmentWorking MACRS Depreciation Production Sales Gross Income


n fCTDC Capital Table D ($/yr) Costs Revenue Earnings Tax
1 ($30.00)
2 ($30.00)
3 ($30.00) ($40.00)
4 20.00% $18.00 $55.00 $75.00 $2.00 $0.80
5 32.00% $28.80 $78.00 $112.99 $6.19 $2.48
6 19.20% $17.28 $100.00 $150.00 $32.72 $13.09
7 11.52% $10.37 $100.00 $150.00 $39.63 $15.85
8 11.52% $10.37 $100.00 $150.00 $39.63 $15.85
9 5.76% $5.18 $100.00 $150.00 $44.82 $17.93
10 $100.00 $150.00 $50.00 $20.00
11 $100.00 $150.00 $50.00 $20.00
12 $100.00 $150.00 $50.00 $20.00
13 $100.00 $150.00 $50.00 $20.00
14 $100.00 $150.00 $50.00 $20.00
15 $40.00 $100.00 $150.00 $50.00 $20.00

0.083333
rnings = Sales Revenue - Production Costs - Depreciation

Income Tax = Tax Rate*Gross Earnings

Net Earnings = Gross Earnings - Income Tax

Cash flow = Investment in TDC + Working Capital + Net Earnings + Depreciation

Net Cash Discount PV Cum PV


Earnings Flow Factor
($30.00) 1.00 ($30.00) ($30.00)
($30.00) 0.84 ($25.32) ($55.32)
($70.00) 0.71 ($49.85) ($105.16)
$1.20 $19.20 0.60 $11.54 ($93.63)
$3.72 $32.52 0.51 $16.49 ($77.14)
$19.63 $36.91 0.43 $15.80 ($61.34)
$23.78 $34.15 0.36 $12.33 ($49.01)
$23.78 $34.15 0.30 $10.41 ($38.60)
$26.89 $32.07 0.26 $8.25 ($30.36)
$30.00 $30.00 0.22 $6.51 ($23.84)
$30.00 $30.00 0.18 $5.49 ($18.35)
$30.00 $30.00 0.15 $4.64 ($13.71)
$30.00 $30.00 0.13 $3.91 ($9.80)
$30.00 $30.00 0.11 $3.30 ($6.50)
$30.00 $70.00 0.09 $6.50 $0.00 NPV

Cumulative PV =∑PV

Present Value (PV) = Discount Factor*Cash Flow

Discount Factor = 1/(1+ r/m)^n


Total depreciable capital 90 MM $
Production cost 100 MM $/yr Gross earnings = Sales Revenue -
Working capital 40 MM $
Capacity 90% Selling Price $ 0.93 per unit Income Tax = Tax Rate*G
Sales revenue $140 MM $/yr 150 MM units
Income tax rate 0.40
Nominal interest rate, r 15.00%
Compouding period, m 1.00 year

InvestmentWorking MACRS Depreciation Production Sales Gross Income


n fCTDC Capital Table D ($/yr) Costs Revenue Earnings Tax
1 ($30.00)
2 ($30.00)
3 ($30.00) ($40.00)
4 20.00% $18.00 $55.00 $70.09 ($2.91) ($1.17)
5 32.00% $28.80 $78.00 $105.59 ($1.21) ($0.48)
6 19.20% $17.28 $100.00 $140.17 $22.89 $9.16
7 11.52% $10.37 $100.00 $140.17 $29.80 $11.92
8 11.52% $10.37 $100.00 $140.17 $29.80 $11.92
9 5.76% $5.18 $100.00 $140.17 $34.99 $13.99
10 $100.00 $140.17 $40.17 $16.07
11 $100.00 $140.17 $40.17 $16.07
12 $100.00 $140.17 $40.17 $16.07
13 $100.00 $140.17 $40.17 $16.07
14 $100.00 $140.17 $40.17 $16.07
15 $40.00 $100.00 $140.17 $40.17 $16.07
rnings = Sales Revenue - Production Costs - Depreciation

Income Tax = Tax Rate*Gross Earnings

Net Earnings = Gross Earnings - Income Tax

Cash flow = Investment in TDC + Working Capital + Net Earnings + Depreciation

Net Cash Discount PV Cum PV


Earnings Flow Factor
($30.00) 1.00 ($30.00) ($30.00)
($30.00) 0.87 ($26.09) ($56.09)
($70.00) 0.76 ($52.93) ($109.02)
($1.75) $16.25 0.66 $10.69 ($98.33)
($0.73) $28.07 0.57 $16.05 ($82.28)
$13.73 $31.01 0.50 $15.42 ($66.86)
$17.88 $28.25 0.43 $12.21 ($54.65)
$17.88 $28.25 0.38 $10.62 ($44.03)
$20.99 $26.18 0.33 $8.56 ($35.47)
$24.10 $24.10 0.28 $6.85 ($28.62)
$24.10 $24.10 0.25 $5.96 ($22.66)
$24.10 $24.10 0.21 $5.18 ($17.48)
$24.10 $24.10 0.19 $4.50 ($12.98)
$24.10 $24.10 0.16 $3.92 ($9.06)
$24.10 $64.10 0.14 $9.06 ($0.00) NPV

Cumulative PV =∑PV

Present Value (PV) = Discount Factor*Cash Flow

Discount Factor = 1/(1+ r/m)^n


Total depreciable capital 90 MM $
Production cost 100 MM $/yr Gross earnings = Sales Revenue - Pr
Working capital 40 MM $
Capacity 90% Income Tax = Tax Rate*Gr
Sales revenue $150 MM $/yr
Income tax rate 0.40
Nominal interest rate, r 18.50%
Compouding period, m 1.00 year

InvestmentWorking MACRS Depreciation Production Sales Gross Income


n fCTDC Capital Table D ($/yr) Costs Revenue Earnings Tax
1 ($30.00)
2 ($30.00)
3 ($30.00) ($40.00)
4 20.00% $18.00 $55.00 $75.00 $2.00 $0.80
5 32.00% $28.80 $78.00 $112.99 $6.19 $2.48
6 19.20% $17.28 $100.00 $150.00 $32.72 $13.09
7 11.52% $10.37 $100.00 $150.00 $39.63 $15.85
8 11.52% $10.37 $100.00 $150.00 $39.63 $15.85
9 5.76% $5.18 $100.00 $150.00 $44.82 $17.93
10 $100.00 $150.00 $50.00 $20.00
11 $100.00 $150.00 $50.00 $20.00
12 $100.00 $150.00 $50.00 $20.00
13 $100.00 $150.00 $50.00 $20.00
14 $100.00 $150.00 $50.00 $20.00
15 $40.00 $100.00 $150.00 $50.00 $20.00
rnings = Sales Revenue - Production Costs - Depreciation

Income Tax = Tax Rate*Gross Earnings

Net Earnings = Gross Earnings - Income Tax

Cash flow = Investment in TDC + Working Capital + Net Earnings + Depreciation

Net Cash Discount PV Cum PV


Earnings Flow Factor
($30.00) 1.00 ($30.00) ($30.00)
($30.00) 0.84 ($25.32) ($55.32)
($70.00) 0.71 ($49.85) ($105.16)
$1.20 $19.20 0.60 $11.54 ($93.63)
$3.72 $32.52 0.51 $16.49 ($77.14) ROI (gross)ROI (net) ROI (EBITDA)
$19.63 $36.91 0.43 $15.80 ($61.34) 36% 22% 56%
$23.78 $34.15 0.36 $12.33 ($49.01)
$23.78 $34.15 0.30 $10.41 ($38.60)
ROI = (EBITDA, 1st year of full production)/(T
$26.89 $32.07 0.26 $8.25 ($30.36)
$30.00 $30.00 0.22 $6.51 ($23.85) ROI = (Net Earnings, 1st year of full production)/(Total c
$30.00 $30.00 0.18 $5.49 ($18.35) ROI = (Gross Earnings, 1st year of full production)/(Total capital)
$30.00 $30.00 0.15 $4.64 ($13.72)
$30.00 $30.00 0.13 $3.91 ($9.80)
$30.00 $30.00 0.11 $3.30 ($6.50)
$30.00 $70.00 0.09 $6.50 ($0.00) NPV

Cumulative PV =∑PV

Present Value (PV) = Discount Factor*Cash Flow

Discount Factor = 1/(1+ r/m)^n


TDA, 1st year of full production)/(Total capital)
1st year of full production)/(Total capital)
ull production)/(Total capital)
Total depreciable capital 90 MM $
Production cost 100 MM $/yr Gross earnings = Sales Revenue - Pr
Working capital 40 MM $
Capacity 90% Income Tax = Tax Rate*Gr
Sales revenue $150 MM $/yr
Income tax rate 0.40
Nominal interest rate, r 18.50%
Compouding period, m 1.00 year

InvestmentWorking MACRS Depreciation Production Sales Gross Income


n fCTDC Capital Table D ($/yr) Costs Revenue Earnings Tax
1 ($30.00)
2 ($30.00)
3 ($30.00) ($40.00)
4 20.00% $18.00 $55.00 $75.00 $2.00 $0.80
5 32.00% $28.80 $78.00 $112.99 $6.19 $2.48
6 19.20% $17.28 $100.00 $150.00 $32.72 $13.09
7 11.52% $10.37 $100.00 $150.00 $39.63 $15.85
8 11.52% $10.37 $100.00 $150.00 $39.63 $15.85
9 5.76% $5.18 $100.00 $150.00 $44.82 $17.93
10 $100.00 $150.00 $50.00 $20.00
11 $100.00 $150.00 $50.00 $20.00
12 $100.00 $150.00 $50.00 $20.00
13 $100.00 $150.00 $50.00 $20.00
14 $100.00 $150.00 $50.00 $20.00
15 $40.00 $100.00 $150.00 $50.00 $20.00
rnings = Sales Revenue - Production Costs - Depreciation

Income Tax = Tax Rate*Gross Earnings

Net Earnings = Gross Earnings - Income Tax

Cash flow = Investment in TDC + Working Capital + Net Earnings + Depreciation

Net Cash Discount PV Cum PV


Earnings Flow Factor
($30.00) 1.00 ($30.00) ($30.00)
($30.00) 0.84 ($25.32) ($55.32)
($70.00) 0.71 ($49.85) ($105.16)
$1.20 $19.20 0.60 $11.54 ($93.63)
$3.72 $32.52 0.51 $16.49 ($77.14) PBP (gross)PBP (net) PBP (EBITDA)
$19.63 $36.91 0.43 $15.80 ($61.34) 2.75 4.58 1.80
$23.78 $34.15 0.36 $12.33 ($49.01)
$23.78 $34.15 0.30 $10.41 ($38.60)
PBP = (Total Capital)/(EBITDA, 1st year of fu
$26.89 $32.07 0.26 $8.25 ($30.36)
$30.00 $30.00 0.22 $6.51 ($23.85) PBP = (Total Capital)/(Net Earnings, 1st year of full pro
$30.00 $30.00 0.18 $5.49 ($18.35) PBP = (Total Capital)/(Gross Earnings, 1st year of full production)
$30.00 $30.00 0.15 $4.64 ($13.72)
$30.00 $30.00 0.13 $3.91 ($9.80)
$30.00 $30.00 0.11 $3.30 ($6.50)
$30.00 $70.00 0.09 $6.50 ($0.00) NPV

Cumulative PV =∑PV

Present Value (PV) = Discount Factor*Cash Flow

Discount Factor = 1/(1+ r/m)^n


l Capital)/(EBITDA, 1st year of full production)
(Net Earnings, 1st year of full production)/(Total capital)
gs, 1st year of full production)

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