Met North Energy Corporation: 4 Year Net Profit Projections 1278

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Met North Energy Corporation: 4 Year Net Profit Projections

The current budget figures for the four year period 1996 – 1999 show a steady

decrease in profits eventually resulting in a loss during the fourth year. The

graph shows the decrease in net profit while gross profit remains virtually

static and expenses increase. After an initial loss during the first year the

figures indicate a healthy profit at the end of the period.

The figures in this graph from the spreadsheet clearly show the long term

benefits gained by the additional $50,000 when it is added to the 1996

advertising budget. Despite a loss of $10,000 in the first year the projected

profit for the 4 year period is $160,500.

The results of the spreadsheet showing both budget options can be reduced to

just one simple graph. This supported by market research would convince

management as to which option to choose.

Met North Energy Corporation Net Profit

Projections

Year 1996 1997 1998 1999

Sales $450,000

$455,000 $455,000 $460,000 Projected Sales $450,000

$523,250 $523,250 $529,000 Cost of Goods Sold $180,000

$185,000 $180,000 $185,000 Projected Cost $180,000

$203,500 $198,000 $203,500 Gross Profit $270,000

$270,000 $275,000 $275,000 Projected Gross Profit $270,000

$319,750 $325,250 $325,500

Less Expenses:

Salaries $80,000

$90,000 $100,000 $110,000 Advertising $50,000

$50,000 $50,000 $50,000 Increase in Advertising $100,000

$50,000 $50,000 $50,000

/ 1996 Interest $60,000 $60,000

$60,000 $60,000 Depreciation $40,000 $50,000

$55,000 $65,000

Total Expenses $230,000

$250,000 $265,000 $285,000

Projected Expenses $280,000

$250,000 $265,000 $285,000

Net Profit $40,000

$20,000 $10,000 -$10,000

Projected Net Profit -$10,000

$69,750 $60,250 $40,500

Increase in profit

$160,500

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