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Base Case Case A

The document compares key financial metrics across a base case and three other cases (A, B, C) for a company. It analyzes contribution, bad debt costs, cash discounts, operating income, cost of carrying receivables, and residual income. Case A shows higher sales, contribution and operating income compared to the base case. Case B shows higher sales, contribution and operating income but also higher average collection period and proportion of credit sales. Case C shows lower sales but higher cash discounts and a lower average collection period.

Uploaded by

Srikanth Vasantada
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© © All Rights Reserved
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Download as XLSX, PDF, TXT or read online on Scribd
34 views

Base Case Case A

The document compares key financial metrics across a base case and three other cases (A, B, C) for a company. It analyzes contribution, bad debt costs, cash discounts, operating income, cost of carrying receivables, and residual income. Case A shows higher sales, contribution and operating income compared to the base case. Case B shows higher sales, contribution and operating income but also higher average collection period and proportion of credit sales. Case C shows lower sales but higher cash discounts and a lower average collection period.

Uploaded by

Srikanth Vasantada
Copyright
© © All Rights Reserved
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Sales

Average Cllection Period


Proprtion of credit Sales
% credit sales on cash discount
Cash discount term
Bad debt cost
Contribution Margin
Tax rate
Post tax cost of capital
Step 1 Contribution:
Contribution
Change in Contribution
Step 2 Bad debt
Bad debt cost
Change in Bad debt cost
Step 3 Cash Discount
Cash discounts
Change in Cash discounts
Step 4 Operating Income
Operating Income
Change in operating income
Net Operating Income
Change in net operating income
Step 4 Cost of carrying receivables
Investment in receivables
Cost of carrying receivables
Change in Cost of carrying receivables
Step 5 Residual Income
Residual Income
Change in residual income

Base Case
800
20
0.7
50%
1%
0
0.2
30%
12%

Case A
850
20
0.7
50%
1%
12%
0.2
30%
12%

160

170
10

6
6

2.8

2.98
0.18

157.2

161.03
3.825
112.72
2.68

110.04

24.55
2.95

26.08
3.13
0.18

107.09

109.59
2.49

Case B
840
50
0.8
50%
1%
0%
0.2
30%
12%

Case C
820
16
0.7
70%
2%
0
0.2
30%
12%

168
8

164
4

0
0

0
0

3.36
0.56

8.04
5.24

164.64
7.44
115.25
5.21

155.96
-1.236
109.17
-0.87

73.64
8.84
5.89

20.13
2.42
-0.53

106.41
-0.68

106.76
-0.33

Sales
Average Cllection Period
Proprtion of credit Sales
% credit sales on cash discount
Cash discount term
Bad debt cost
Contribution Margin
Tax rate
Post tax cost of capital
Step 1 Contribution:
Contribution
Change in Contribution
Step 2 Bad debt
Bad debt cost
Change in Bad debt cost
Step 3 Cash Discount
Cash discounts
Change in Cash discounts
Step 4 Operating Income
Operating Income
Change in operating income
Net Operating Income
Change in net operating income
Step 4 Cost of carrying receivables
Investment in receivables
Cost of carrying receivables
Change in Cost of carrying receivables
Step 5 Residual Income
Residual Income
Change in residual income

Base Case
800
20
0.7
50%
1%
0
0.2
30%
12%

Case A
850
20
0.7
50%
1%
12%
0.2
30%
12%

160

170
10

6
6

2.8

2.98
0.18

157.2

161.03
3.825
112.72
2.68

110.04

31.11
3.73

26.44
3.17
-0.56

106.31

109.54
3.24

Case B
840
50
0.8
50%
1%
0%
0.2
30%
12%

Case C
820
16
0.7
70%
2%
0
0.2
30%
12%

168
8

164
4

0
0

0
0

3.36
0.56

8.04
5.24

164.64
7.44
115.25
5.21

155.96
-1.236
109.17
-0.87

74.67
8.96
5.23

20.41
2.45
-1.28

106.29
-0.02

106.73
0.42

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