Suppose that in 2010, Global launches an aggressive marketing campaign that boosts sales by 15%. However, their operating margin falls from 5.57% to 4.50%. Suppose that they have no other income, interest expenses are unchanged, and taxes are the same percentage of pretax income as in 2009.
a. What is Global's EBIT in 2010?
b. What is Global's income in 2010?
c. If Global's P/E ratio and number of shares outstanding remains unchanged, what is Global's
share price in 2010?
Breakeven point = Fixed cost / contribution margin ratio contribution margin ratio = sales - variable cost / sales.
How to calculate the break even of EBIT
You take the Earning before interest and taxes (EBIT)/sales=Operating profit margin
Its normally EBITDA and yes it is.
EBIT means "Earnings Before Interests and Taxes"
Leverage means to get more with little force as in physics. But in accounting it tells us how we can know from our sales that how much EBIT (earnings before interest and taxes) will be. In acc it is called degree of leverage and is calculated as DOL= contribution margin/EBIT For exp, if DOL=2 It means if we increase sale by 5% EBIT will increase by (2*5%) 10%. ok dear pray for me
Breakeven point = Fixed cost + EBIT / contribution margin ratio Contribution margin ratio = sales price - variable cost Contribution margin ratio = 1 - 0.5 = 0.5 or 50% Breakeven point = 215000 / .5 = 430000
To calculate the break-even level for Earnings Before Interest and Taxes (EBIT), you first need to identify your fixed costs and variable costs per unit, as well as the selling price per unit. The break-even point in terms of units can be determined using the formula: Break-even units = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit). Once you have the break-even units, you can find the break-even EBIT by multiplying the number of break-even units by the contribution margin (Selling Price - Variable Cost). This gives you the EBIT level at which total revenues equal total costs, resulting in zero profit.
ebit diagram
EBITDA Margin = EBITDA/Sales
contribution margin = sales - variable cost
sales-variable coste= contribution margin