Sheet1
| Financial Impact for Expansion project for Nordstrom | |||||||||||
| Period in years | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
| Variable Costs per Unit | |||||||||||
| Raw Materials | $9.00 | $10.00 | $11.00 | $ 12.00 | $ 13.00 | $ 14.00 | $ 15.00 | $ 16.00 | $ 17.00 | $ 18.00 | |
| Manufactured Components | $22.00 | $25.00 | $28.00 | $ 31.00 | $ 34.00 | $ 37.00 | $ 40.00 | $ 43.00 | $ 46.00 | $ 49.00 | |
| Purchased Components | $35.00 | $38.00 | $40.00 | $ 42.67 | $ 44.89 | $ 47.41 | $ 49.73 | $ 52.18 | $ 54.55 | $ 56.97 | |
| Labor | $22.00 | $25.00 | $30.00 | $ 33.67 | $ 38.22 | $ 42.19 | $ 46.54 | $ 50.64 | $ 54.91 | $ 59.06 | |
| Internal Transp. & Storage | $0.50 | $1.00 | $1.50 | $ 2.00 | $ 2.50 | $ 3.00 | $ 3.50 | $ 4.00 | $ 4.50 | $ 5.00 | |
| Energy | $1.25 | $1.50 | $1.75 | $ 2.00 | $ 2.25 | $ 2.50 | $ 2.75 | $ 3.00 | $ 3.25 | $ 3.50 | |
| Total Variable Costs Per Unit | $89.75 | $100.50 | $112.25 | $123.33 | $134.86 | $146.09 | $157.52 | $168.82 | $180.20 | $191.53 | |
| Sales Price Per Unit | $150.25 | $151.30 | $152.50 | $ 153.60 | $ 154.77 | $ 155.89 | $ 157.04 | $ 158.17 | $ 159.32 | $ 160.45 | |
| Units Sold | 30,000.00 | 35,000.00 | 40,000.00 | 45,000.00 | 50,000.00 | 55,000.00 | 60,000.00 | 65,000.00 | 70,000.00 | 75,000.00 | |
| Total Sales | $4,507,500.00 | $5,295,500.00 | $6,100,000.00 | $6,912,000.00 | $7,738,333.33 | $8,573,888.89 | $9,422,444.44 | $10,281,234.57 | $11,152,267.49 | $12,034,094.65 | |
| Total Variable Costs | $2,692,500.00 | $3,517,500.00 | $4,490,000.00 | $5,550,000.00 | $6,743,055.56 | $8,035,092.59 | $9,451,296.30 | $10,973,230.45 | $12,614,283.26 | $14,364,797.67 | |
| Total Fixed Costs | $ 90,000.00 | $ 95,000.00 | $ 100,000.00 | $ 105,000.00 | $ 110,000.00 | $ 115,000.00 | $ 120,000.00 | $ 125,000.00 | $ 130,000.00 | $ 135,000.00 | |
| Total COGS | $2,782,500.00 | $3,612,500.00 | $4,590,000.00 | $5,655,000.00 | $6,853,055.56 | $8,150,092.59 | $9,571,296.30 | $11,098,230.45 | $12,744,283.26 | $14,499,797.67 | |
| Gross Profit | $1,725,000.00 | $1,683,000.00 | $1,510,000.00 | $1,257,000.00 | $885,277.78 | $423,796.30 | ($148,851.85) | ($816,995.88) | ($1,592,015.78) | ($2,465,703.02) | |
| Gen, Sales & Admin Expense | $ 5,000.00 | $ 6,000.00 | $ 7,000.00 | $ 8,000.00 | $ 9,000.00 | $ 10,000.00 | $ 11,000.00 | $ 12,000.00 | $ 13,000.00 | $ 14,000.00 | |
| Depreciation | $ 40,000.00 | $ 40,000.00 | $ 40,000.00 | $ 40,000.00 | $ 40,000.00 | $ 40,000.00 | $ 40,000.00 | $ 40,000.00 | $ 40,000.00 | $ 40,000.00 | |
| EBIT(Earn. Before Int. & Tax) | $ 1,680,000.00 | $ 1,637,000.00 | $ 1,463,000.00 | $ 1,209,000.00 | $ 836,277.78 | $ 373,796.30 | $ (199,851.85) | $ (868,995.88) | $ (1,645,015.78) | $ (2,519,703.02) | |
| Income Tax | 0.35 | $ 588,000.00 | $ 572,950.00 | $ 512,050.00 | $ 423,150.00 | $ 292,697.22 | $ 130,828.70 | $ (69,948.15) | $ (304,148.56) | $ (575,755.52) | $ (881,896.06) |
| Incremental Earnings | $1,092,000 | $1,064,050 | $950,950 | $785,850 | $543,581 | $242,968 | ($129,904) | ($564,847) | ($1,069,260) | ($1,637,807) | |
| Depreciation Add Back | $40,000.00 | $40,000.00 | $40,000.00 | $40,000.00 | $40,000.00 | $40,000.00 | $40,000.00 | $40,000.00 | $40,000.00 | $40,000.00 | |
| Incremental Free Cash Flow | ($5,485,000) | $1,132,000.00 | $1,104,050.00 | $990,950.00 | $825,850.00 | $583,580.56 | $282,967.59 | ($89,903.70) | ($524,847.33) | ($1,029,260.25) | ($1,597,806.96) |
Sheet2
Sheet3
Running head: FINANCIAL IMPACT FOR EXPANSION FOR NORDSTROM 1
FINANCIAL IMPACT FOR EXPANSION FOR NORDSTROM 2
FINANCIAL IMPACT FOR EXPANSION FOR NORDSTROM
Institution
Tutor
Name
Date
Financial impact for expansion for Nordstrom (10 Years)
Figure 1: Spreadsheet
1) The incremental cash flow also refers to as the operating cash, is the net cash that a company gains after the deductions like tax have been made over its lifetime. The incremental cash flow is obtained by subtracting taxes from the difference between the cash inflows and the cash outflows (Shadunsky, 2017). The incremental cash for Nordstrom is not uniform. It is relatively high in the beginning, but it drops when the company begins having massive losses.
The annual cash flow shows the various cash inflows and outflows within the company. The cash flow for Nordstrom shows more profits obtained up to the 7th year where the company records losses. The decline in the profits obtained could result from the increase in inflation in the country or unfavorable government policies they do not favor the business operations of Nordstrom. The decline in the purchase volumes could have also caused the losses seen from the 7th to the 10th year.
2) The cumulative cash flows refer to the sum of all the cash inflows that a business has obtained since its inception. The cumulative cash flow is different from net cash flow since the net cash flow represents the difference between the cash inflows and the net cash outflows (Shadunsky, 2017).
When making a cash flow statement, like the one made for Nordstrom Company, it is essential to include the operating, investing and financing sections. The operating section shows the cash transactions that take place daily in the company, that is, the transactions that add up to the revenues and income. The investing section shows the cash transactions that have been used to facilitate the capital inputs to the business and the financing section shows the transactions between the company and the investors to the business. The financing transactions can be in the form of debt repayments, share offerings, and share purchases.
Loans can be of great value to a company especially when other financing methods like finding investors has been unsuccessful before a company takes a loan. However, it should have a way to recover the money as well as the interest that the loan will have earned. To save the situation that Nordstrom has may require a loan to boost the business.
Reference
Shadunsky, Alex. (2017, September 26). Net Cash Flow vs. Cumulative Cash Flow. Bizfluent. Retrieved from https://bizfluent.com/info-12063456-net-cash-flow-vs-cumulative-cash-flow.html
Period in years012345678910
Variable Costs per Unit
Raw Materials$9.00$10.00$11.0012.00$ 13.00$ 14.00$ 15.00$ 16.00$ 17.00$ 18.00$
Manufactured Components$22.00$25.00$28.0031.00$ 34.00$ 37.00$ 40.00$ 43.00$ 46.00$ 49.00$
Purchased Components$35.00$38.00$40.0042.67$ 44.89$ 47.41$ 49.73$ 52.18$ 54.55$ 56.97$
Labor$22.00$25.00$30.0033.67$ 38.22$ 42.19$ 46.54$ 50.64$ 54.91$ 59.06$
Internal Transp. & Storage$0.50$1.00$1.502.00$ 2.50$ 3.00$ 3.50$ 4.00$ 4.50$ 5.00$
Energy$1.25$1.50$1.752.00$ 2.25$ 2.50$ 2.75$ 3.00$ 3.25$ 3.50$
Total Variable Costs Per Unit$89.75$100.50$112.25$123.33$134.86$146.09$157.52$168.82$180.20$191.53
Sales Price Per Unit$150.25$151.30$152.50153.60$ 154.77$ 155.89$ 157.04$ 158.17$ 159.32$ 160.45$
Units Sold30,000.0035,000.0040,000.0045,000.0050,000.0055,000.0060,000.0065,000.0070,000.0075,000.00
Total Sales$4,507,500.00$5,295,500.00$6,100,000.00$6,912,000.00$7,738,333.33$8,573,888.89$9,422,444.44$10,281,234.57$11,152,267.49$12,034,094.65
Total Variable Costs$2,692,500.00$3,517,500.00$4,490,000.00$5,550,000.00$6,743,055.56$8,035,092.59$9,451,296.30$10,973,230.45$12,614,283.26$14,364,797.67
Total Fixed Costs90,000.00$ 95,000.00$ 100,000.00$ 105,000.00$ 110,000.00$ 115,000.00$ 120,000.00$ 125,000.00$ 130,000.00$ 135,000.00$
Total COGS$2,782,500.00$3,612,500.00$4,590,000.00$5,655,000.00$6,853,055.56$8,150,092.59$9,571,296.30$11,098,230.45$12,744,283.26$14,499,797.67
Gross Profit$1,725,000.00$1,683,000.00$1,510,000.00$1,257,000.00$885,277.78$423,796.30($148,851.85)($816,995.88)($1,592,015.78)($2,465,703.02)
Gen, Sales & Admin Expense5,000.00$ 6,000.00$ 7,000.00$ 8,000.00$ 9,000.00$ 10,000.00$ 11,000.00$ 12,000.00$ 13,000.00$ 14,000.00$
Depreciation40,000.00$ 40,000.00$ 40,000.00$ 40,000.00$ 40,000.00$ 40,000.00$ 40,000.00$ 40,000.00$ 40,000.00$ 40,000.00$
EBIT(Earn. Before Int. & Tax)1,680,000.00$ 1,637,000.00$ 1,463,000.00$ 1,209,000.00$ 836,277.78$ 373,796.30$ (199,851.85)$ (868,995.88)$ (1,645,015.78)$ (2,519,703.02)$
Income Tax0.35588,000.00$ 572,950.00$ 512,050.00$ 423,150.00$ 292,697.22$ 130,828.70$ (69,948.15)$ (304,148.56)$ (575,755.52)$ (881,896.06)$
Incremental Earnings$1,092,000$1,064,050$950,950$785,850$543,581$242,968($129,904)($564,847)($1,069,260)($1,637,807)
Depreciation Add Back$40,000.00$40,000.00$40,000.00$40,000.00$40,000.00$40,000.00$40,000.00$40,000.00$40,000.00$40,000.00
Incremental Free Cash Flow($5,485,000)$1,132,000.00$1,104,050.00$990,950.00$825,850.00$583,580.56$282,967.59($89,903.70)($524,847.33)($1,029,260.25)($1,597,806.96)
Financial Impact for Expansion project for Nordstrom
Financial Impact for Expansion project for Nordstrom.docx
Running head: FINANCIAL IMPACT FOR EXPANSION FOR NORDSTROM 1
FINANCIAL IMPACT FOR EXPANSION FOR NORDSTROM 2
FINANCIAL IMPACT FOR EXPANSION FOR NORDSTROM
Institution
Tutor
Name
Date
Financial impact for expansion for Nordstrom (10 Years)
Figure 1: Spreadsheet
The incremental cash flow also refers to as the operating cash, is the net cash that a company gains after the deductions like tax have been made over its lifetime. The incremental cash flow is obtained by subtracting taxes from the difference between the cash inflows and the cash outflows (Shadunsky, 2017). The incremental cash for Nordstrom is not uniform. It is relatively high in the beginning, but it drops when the company begins having massive losses.
The annual cash flow shows the various cash inflows and outflows within the company. The cash flow for Nordstrom shows more profits obtained up to the 7th year where the company records losses. The decline in the profits obtained could result from the increase in inflation in the country or unfavorable government policies they do not favor the business operations of Nordstrom. The decline in the purchase volumes could have also caused the losses seen from the 7th to the 10th year.
The cumulative cash flows refer to the sum of all the cash inflows that a business has obtained since its inception. The cumulative cash flow is different from net cash flow since the net cash flow represents the difference between the cash inflows and the net cash outflows (Shadunsky, 2017).
When making a cash flow statement, like the one made for Nordstrom Company, it is essential to include the operating, investing and financing sections. The operating section shows the cash transactions that take place daily in the company, that is, the transactions that add up to the revenues and income. The investing section shows the cash transactions that have been used to facilitate the capital inputs to the business and the financing section shows the transactions between the company and the investors to the business. The financing transactions can be in the form of debt repayments, share offerings, and share purchases.
Loans can be of great value to a company especially when other financing methods like finding investors has been unsuccessful before a company takes a loan. However, it should have a way to recover the money as well as the interest that the loan will have earned. To save the situation that Nordstrom has may require a loan to boost the business.
Reference
Shadunsky, Alex. (2017, September 26). Net Cash Flow vs. Cumulative Cash Flow. Bizfluent. Retrieved from https://bizfluent.com/info-12063456-net-cash-flow-vs-cumulative-cash-flow.html
Period in years012345678910
Variable Costs per Unit
Raw Materials$9.00$10.00$11.0012.00$ 13.00$ 14.00$ 15.00$ 16.00$ 17.00$ 18.00$
Manufactured Components$22.00$25.00$28.0031.00$ 34.00$ 37.00$ 40.00$ 43.00$ 46.00$ 49.00$
Purchased Components$35.00$38.00$40.0042.67$ 44.89$ 47.41$ 49.73$ 52.18$ 54.55$ 56.97$
Labor$22.00$25.00$30.0033.67$ 38.22$ 42.19$ 46.54$ 50.64$ 54.91$ 59.06$
Internal Transp. & Storage$0.50$1.00$1.502.00$ 2.50$ 3.00$ 3.50$ 4.00$ 4.50$ 5.00$
Energy$1.25$1.50$1.752.00$ 2.25$ 2.50$ 2.75$ 3.00$ 3.25$ 3.50$
Total Variable Costs Per Unit$89.75$100.50$112.25$123.33$134.86$146.09$157.52$168.82$180.20$191.53
Sales Price Per Unit$150.25$151.30$152.50153.60$ 154.77$ 155.89$ 157.04$ 158.17$ 159.32$ 160.45$
Units Sold30,000.0035,000.0040,000.0045,000.0050,000.0055,000.0060,000.0065,000.0070,000.0075,000.00
Total Sales$4,507,500.00$5,295,500.00$6,100,000.00$6,912,000.00$7,738,333.33$8,573,888.89$9,422,444.44$10,281,234.57$11,152,267.49$12,034,094.65
Total Variable Costs$2,692,500.00$3,517,500.00$4,490,000.00$5,550,000.00$6,743,055.56$8,035,092.59$9,451,296.30$10,973,230.45$12,614,283.26$14,364,797.67
Total Fixed Costs90,000.00$ 95,000.00$ 100,000.00$ 105,000.00$ 110,000.00$ 115,000.00$ 120,000.00$ 125,000.00$ 130,000.00$ 135,000.00$
Total COGS$2,782,500.00$3,612,500.00$4,590,000.00$5,655,000.00$6,853,055.56$8,150,092.59$9,571,296.30$11,098,230.45$12,744,283.26$14,499,797.67
Gross Profit$1,725,000.00$1,683,000.00$1,510,000.00$1,257,000.00$885,277.78$423,796.30($148,851.85)($816,995.88)($1,592,015.78)($2,465,703.02)
Gen, Sales & Admin Expense5,000.00$ 6,000.00$ 7,000.00$ 8,000.00$ 9,000.00$ 10,000.00$ 11,000.00$ 12,000.00$ 13,000.00$ 14,000.00$
Depreciation40,000.00$ 40,000.00$ 40,000.00$ 40,000.00$ 40,000.00$ 40,000.00$ 40,000.00$ 40,000.00$ 40,000.00$ 40,000.00$
EBIT(Earn. Before Int. & Tax)1,680,000.00$ 1,637,000.00$ 1,463,000.00$ 1,209,000.00$ 836,277.78$ 373,796.30$ (199,851.85)$ (868,995.88)$ (1,645,015.78)$ (2,519,703.02)$
Income Tax0.35588,000.00$ 572,950.00$ 512,050.00$ 423,150.00$ 292,697.22$ 130,828.70$ (69,948.15)$ (304,148.56)$ (575,755.52)$ (881,896.06)$
Incremental Earnings$1,092,000$1,064,050$950,950$785,850$543,581$242,968($129,904)($564,847)($1,069,260)($1,637,807)
Depreciation Add Back$40,000.00$40,000.00$40,000.00$40,000.00$40,000.00$40,000.00$40,000.00$40,000.00$40,000.00$40,000.00
Incremental Free Cash Flow($5,485,000)$1,132,000.00$1,104,050.00$990,950.00$825,850.00$583,580.56$282,967.59($89,903.70)($524,847.33)($1,029,260.25)($1,597,806.96)
Financial Impact for Expansion project for Nordstrom
Financial Impact for Expansion project for Nordstrom.xlsx
Sheet1
| Financial Impact for Expansion project for Nordstrom | |||||||||||
| Period in years | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
| Variable Costs per Unit | |||||||||||
| Raw Materials | $9.00 | $10.00 | $11.00 | $ 12.00 | $ 13.00 | $ 14.00 | $ 15.00 | $ 16.00 | $ 17.00 | $ 18.00 | |
| Manufactured Components | $22.00 | $25.00 | $28.00 | $ 31.00 | $ 34.00 | $ 37.00 | $ 40.00 | $ 43.00 | $ 46.00 | $ 49.00 | |
| Purchased Components | $35.00 | $38.00 | $40.00 | $ 42.67 | $ 44.89 | $ 47.41 | $ 49.73 | $ 52.18 | $ 54.55 | $ 56.97 | |
| Labor | $22.00 | $25.00 | $30.00 | $ 33.67 | $ 38.22 | $ 42.19 | $ 46.54 | $ 50.64 | $ 54.91 | $ 59.06 | |
| Internal Transp. & Storage | $0.50 | $1.00 | $1.50 | $ 2.00 | $ 2.50 | $ 3.00 | $ 3.50 | $ 4.00 | $ 4.50 | $ 5.00 | |
| Energy | $1.25 | $1.50 | $1.75 | $ 2.00 | $ 2.25 | $ 2.50 | $ 2.75 | $ 3.00 | $ 3.25 | $ 3.50 | |
| Total Variable Costs Per Unit | $89.75 | $100.50 | $112.25 | $123.33 | $134.86 | $146.09 | $157.52 | $168.82 | $180.20 | $191.53 | |
| Sales Price Per Unit | $150.25 | $151.30 | $152.50 | $ 153.60 | $ 154.77 | $ 155.89 | $ 157.04 | $ 158.17 | $ 159.32 | $ 160.45 | |
| Units Sold | 30,000.00 | 35,000.00 | 40,000.00 | 45,000.00 | 50,000.00 | 55,000.00 | 60,000.00 | 65,000.00 | 70,000.00 | 75,000.00 | |
| Total Sales | $4,507,500.00 | $5,295,500.00 | $6,100,000.00 | $6,912,000.00 | $7,738,333.33 | $8,573,888.89 | $9,422,444.44 | $10,281,234.57 | $11,152,267.49 | $12,034,094.65 | |
| Total Variable Costs | $2,692,500.00 | $3,517,500.00 | $4,490,000.00 | $5,550,000.00 | $6,743,055.56 | $8,035,092.59 | $9,451,296.30 | $10,973,230.45 | $12,614,283.26 | $14,364,797.67 | |
| Total Fixed Costs | $ 90,000.00 | $ 95,000.00 | $ 100,000.00 | $ 105,000.00 | $ 110,000.00 | $ 115,000.00 | $ 120,000.00 | $ 125,000.00 | $ 130,000.00 | $ 135,000.00 | |
| Total COGS | $2,782,500.00 | $3,612,500.00 | $4,590,000.00 | $5,655,000.00 | $6,853,055.56 | $8,150,092.59 | $9,571,296.30 | $11,098,230.45 | $12,744,283.26 | $14,499,797.67 | |
| Gross Profit | $1,725,000.00 | $1,683,000.00 | $1,510,000.00 | $1,257,000.00 | $885,277.78 | $423,796.30 | ($148,851.85) | ($816,995.88) | ($1,592,015.78) | ($2,465,703.02) | |
| Gen, Sales & Admin Expense | $ 5,000.00 | $ 6,000.00 | $ 7,000.00 | $ 8,000.00 | $ 9,000.00 | $ 10,000.00 | $ 11,000.00 | $ 12,000.00 | $ 13,000.00 | $ 14,000.00 | |
| Depreciation | $ 40,000.00 | $ 40,000.00 | $ 40,000.00 | $ 40,000.00 | $ 40,000.00 | $ 40,000.00 | $ 40,000.00 | $ 40,000.00 | $ 40,000.00 | $ 40,000.00 | |
| EBIT(Earn. Before Int. & Tax) | $ 1,680,000.00 | $ 1,637,000.00 | $ 1,463,000.00 | $ 1,209,000.00 | $ 836,277.78 | $ 373,796.30 | $ (199,851.85) | $ (868,995.88) | $ (1,645,015.78) | $ (2,519,703.02) | |
| Income Tax | 0.35 | $ 588,000.00 | $ 572,950.00 | $ 512,050.00 | $ 423,150.00 | $ 292,697.22 | $ 130,828.70 | $ (69,948.15) | $ (304,148.56) | $ (575,755.52) | $ (881,896.06) |
| Incremental Earnings | $1,092,000 | $1,064,050 | $950,950 | $785,850 | $543,581 | $242,968 | ($129,904) | ($564,847) | ($1,069,260) | ($1,637,807) | |
| Depreciation Add Back | $40,000.00 | $40,000.00 | $40,000.00 | $40,000.00 | $40,000.00 | $40,000.00 | $40,000.00 | $40,000.00 | $40,000.00 | $40,000.00 | |
| Incremental Free Cash Flow | ($5,485,000) | $1,132,000.00 | $1,104,050.00 | $990,950.00 | $825,850.00 | $583,580.56 | $282,967.59 | ($89,903.70) | ($524,847.33) | ($1,029,260.25) | ($1,597,806.96) |
Sheet2
Sheet3
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