Financial Plan Essay Example | Topics and Well Written Essays - 500 words

Financial Plan - Essay Example Financial break-even point is defined as â€Å"the point where revenue equals expenses and profit is zero† (Smartacus Corporation, 2011, par. 1). For Dr. McDougall’s financial situation, assuming fixed cost = $2.8 and variable cost = $2, the number of units that must be sold to break-even is 3,800 units. The components of the cost of goods sold is calculated by establishing the â€Å"Beginning Finished Goods Inventory + Cost of Goods Manufactured = Finished Goods Available for Sale – Ending Finished Goods Inventory = Cost of Goods Sold† (Averkamp, 2011, par. 1). For Dr. McDougall’s financial performance, it could be assumed that the COGS was arrived at using this: Financial information could be used to determine the available resources which can be used in future plans and endeavors. For Dr. McDougalls’s future plans include the research and development of innovative products of similar natural ingredients in other preparations to cater to other cultural tastes. Therefore, financial information would serve as the gauge for decision-making and to design appropriate strategies that would achieve the defined goals. The relevant financial ratios to determine profitability and success are profitability ratios such as the gross profit margin (gross profit/sales) = 60%; operating profit margin (operating profit/sales) = 31%; and net profit margin (net income/sales) = 26%. These ratios define that there are substantial profits generated from the manufacture of food products that provide a successful measure of returns for the company. Averkamp, H. (2011). How do I calculate the cost of goods sold for a manufacturing company. Retrieved September 22, 2011, from Accounting Coach: http://blog.accountingcoach.com/manufacturing-cost-goods-sold/ Smartacus Corporation. (2011). Break-Even Analysis and Break-Even Point. Retrieved September 22, 2011, from college-cram.com: