Mini-Case 12-7: Sharps and Flats

question 48

Essay

Mini-Case 12-7: Sharps and Flats
Anthony Gray has been interested in music since he was old enough to sit at the piano. He literally grew up with music, and he used his talent to earn his way through college. Anthony has grown tired of his job at a large music house in Houston and is seriously considering moving back to his hometown in Massachusetts to open his own small music shop. In researching this venture, Anthony notices that he must include a projected income statement in his loan application. Use the following statistics from Robert Morris Associates' Annual Statement Studies to answer the following question(s).
Net Sales 100.0 percent
Cost of Sales 59.9 percent
Gross Profit 40.1 percent
Operating Expenses 31.2 percent
Net Profit (Before Taxes) 8.9 percent
-Suppose that a market survey indicates that Anthony's proposed business is likely to generate only $190,000 in sales. What net profit should Anthony expect to earn?

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Definitions:

Significant Predictor

A variable in statistical analysis that is associated with a particular outcome or phenomenon and can accurately forecast or contribute to explaining variations in the outcome.

Type D Personality

A personality type characterized by high levels of stress, negativity, and the tendency to experience emotions intensely and privately.

Cortisol

A steroid hormone produced by the adrenal glands, often released in response to stress and low blood-glucose concentration.

Excessive Amounts

Excessive amounts describe quantities that surpass what is normal, necessary, or reasonable, often with negative consequences.