Using the supply chain finance model developed for Study Question $5,$ calculate the impact on profit margin; ROA; inventory turns; and transportation, warehousing, and inventory costs as a percentage of revenue for the following scenarios:

Scenario A

Transportation costs increase $20\%$

Warehousing costs decrease $5\%$

Average inventory decrease $10\%$

Scenario B

Warehousing is outsourced with the following:

Net fixed assets reduced $20\%$

Inventory reduced $15\%$

Warehousing costs $$0$

Transportation costs reduced $5\%$

Outsourcing provider costs $$2,500,000$

SOLVE THIS QUESTION USING THIS DATA

A$)$ Sales $-$$$200,000,000$ B$)$ COGS$-$ $$90,000,000$ C$)$ Gross Margin $-$ $$110,000,000$ Sales$-$ COGS $$200,000,000-$ $$90,000,000$ D$)$ Transportation Cost $$12,000,000$ E$)$ Warehousing Costs $$3,000,000$ F$)$ Inventory Carrying Cost $-$ $$3,000,000$ Average Inventory x $0\mathrm{.}3-30\%$ x $10,000,000$ G$)$ Other Operating Costs $-$ $$50,000,000$ H$)$ Total Operating Costs$-$ $$68,000,000$ D$+$E$+$F$+$G $$12,000,000+$ $$3,000,000+$$$3,000,000+$ $$50,000,000$ I$)$ EBIT$-$ $$42,000,000$ Gross Margin$-$ total operating cost $$110,000,000-$ $$68,000,000$ J$)$ Interest $-$ $$10,000,000$ K$)$ EBT $-$ $$32,000,000$ EBIT$-$ interest $$42,000,000-$ $$10,000,000$ L$)$ Tax $-$ $$12,800,0000\mathrm{.}4$ x EBT $0\mathrm{.}4$ x $$32,000,000$ M$)$ Net Income $-$$$19,200,000$ EBT$-$ Tax $$32,000,000-$ $$12,800,000$ O$)$ Average Inventory $-$ $$10,000,000$ P$)$ Accounts Receivable $-$$$30,000,000$ Q$)$ Cash $-$ $$15,000,000$ R$)$ Net Fixed Assets $-$ $$90,000,000$ S$)$ Total Assets$-$ $$145,000,000$ O$+$P$+$ Q$+$ R$-$ $$10,000,000+$ $$30,000,000+$ $$15,000,000+$ $$90,000,000$ T$)$Profit Margin $-9\mathrm{.}60\%$ Net Income$/$ Sales $$19,200,000/$ $$200,000,000$ U$)$ ROA$-13\mathrm{.}24\%$ Net Income$/$ Total Assets$$ $$19,200,000/$ $$145,000,000$ V$)$ Inventory Turnover$-9$ COGS$/$ Average Inventory $$90,000,000/$ $$10,000,000$ W$)$ Transportation as $\%$ of revenue $-6\mathrm{.}00\%$ Transportation Costs$/$ Sales$$ $$12,000,000/$ $$200,000,000$ X$)$ Warehousing as $\%$ of revenue $-1\mathrm{.}50\%$ Warehousing costs$/$ sales $$3,000,000/$ $$200,000,000$ Y$)$ Inventory Costs as $\%$ of revenue $-1\mathrm{.}50\%$ Inventory Cost$/$ Sales $$300,000,000/200,000,000$