Business Sensitivity Model

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Information about Business Sensitivity Model

Published on August 13, 2013

Author: oconnellsobm



Reviewing your prices? See the impact of such a change using our Business Sensitivity Calculator.

Changes (improvement = positive %) KEY Enter data here Sales price 5% Formula no go area Sales volume (at the same price) 5% Enter data here but not always Cost of sales 5% Variable overheads 5% Fixed overheads 5% Tax rate 5% Year ended Sales Sales Cost of Variable Fixed Tax 30/06/2013 price volume Sales overheads overheads Rate Sales 1,000,000 1,050,000 1,050,000 1,000,000 1,000,000 1,000,000 1,000,000 Cost of sales 400,000 400,000 420,000 380,000 400,000 400,000 400,000 Gross profit 600,000 650,000 630,000 620,000 600,000 600,000 600,000 Overheads & variable 100,000 100,000 105,000 100,000 95,000 100,000 100,000 & fixed 200,000 200,000 200,000 200,000 200,000 190,000 200,000 Total overheads 300,000 300,000 305,000 300,000 295,000 290,000 300,000 Net profit 300,000 350,000 325,000 320,000 305,000 310,000 300,000 Income tax 90,000 105,000 97,500 96,000 91,500 93,000 85,500 After tax profit 210,000 245,000 227,500 224,000 213,500 217,000 214,500 % improvement on current position 17% 8% 7% 2% 3% 2% Increase / Available for Investment 35,000 17,500 14,000 3,500 7,000 4,500 Notes / use this on explanation page The aim of the sensitivity analysis is to provide an indication of where the greatest improvement in after tax profits can be made i.e. what area of focus will have the largest impact. In many cases the initial assumption is that to generate higher profits the focus should be on increasing sales levels. This analysis can assist in identifying that this is not always the "easiest" way to achieve that aim. With the focus areas identified, it then becomes a matter of identifying the changes, improvements and strategies that can be adopted to achieve the desired improvements. O'Connells OBM Business Sensitivity Model This downloadable tool/calculator/information does not give business, accounting, taxation, investment or financial planning advice. It is intended to provide information in a summary form and is general in nature. The contents do not constitute business, accounting, taxation, investment or financial planning advice and should not be relied upon as such. Formal business, accounting, taxation, investment or financial planning advice should be sought in particular matters. O'Connells OBM Pty Ltd accepts no liability in respect of this information and any person acting solely on the information contained within does so entirely at their own risk. M:AdministrationMarketingWebsite MarketingBusiness_Sensitivity_Analysis_Template.xls

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