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Profitability Example

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Ben Kairu
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25 views12 pages

Profitability Example

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
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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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