# Ryan Boot Company Analysis.

Problem:

A. Analyze Ryan Boot Company, using ratio analysis. Compute the ratios.

B. In your analysis, calculate the overall break-even point in sales dollars and the cash break-even point.

B. BEP in sales dollars

First we must calculate the contribution margin.

CM = Sales – Variable expenses

CM = \$7,000,000 – 4,200,000

CM = \$2,800,000

Contribution Margin Ratio = CM ÷ Sales

CMR = \$2,800,000 ÷ 7,000,000

CMR = 40%

BEP = Total Fixed Assets ÷ CMR

BEP = \$2,100,000 ÷ 40%

BEP = \$5,250,000 in sales dollars

Cash BEP = same as above accept the non cash expenses would be removed from the fixed assets per the instructor help.

Cash BEP = (TFA – Non Cash expenses) ÷ CMR

Cash BEP = (\$2,100,000 – 500,000) ÷ 40%

Cash BEP = \$1,600,000 ÷ 40%

Cash BEP = \$4,000,000

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