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Calculating Percentage Increase document sample
Document Sample
cbad26eb-067c-4244-b3cc-ba8a080b4fa0.xls
Existing Condition After Improvements Legend
Type original
Increase/Decrease
Annual Revenue Sales
estimates in each rose
field
Type assumed
Increase/Decrease
Scrap Rate as % of Sales Scrap
impacts to each factor
in green fields
DO NOT TYPE -
Direct Labor as a % of Increase/Decrease
Formulas will
Sales Productivity
calculate
DO NOT TYPE -
All Overhead Labor as a % Increase/Decrease
Formulas will
of Sales Productivity
calculate
Increase/Decrease
Material as a % of Sales Material % Content
Equals
Formula assumes that half of
Sales -
the other expenses will
(Scrap +
All other expenses Labor +
increase in same ratio as
sales increase and the others
Material +
will remain fixed
Net Profit)
Net Profit as a % of Sales
Net Increase/Decrease in Profit
Increase/Decrease in
inventory investment?
ROI Calculations Rough Cash Impactors
Increase/Decrease in Cash
into Cap Ex
Estimated Cash Increase/Decrease (assuming no change in
AP/AR payment/collection practices)
Revision B Worksheet prepared by Cristi Cristich
cbad26eb-067c-4244-b3cc-ba8a080b4fa0.xls
Revision B Worksheet prepared by Cristi Cristich
cbad26eb-067c-4244-b3cc-ba8a080b4fa0.xls
Existing Condition After Improvements Legend
Type original
Increase/Decrease
Annual Revenue $10,000,000 10% $11,000,000 estimates in each
Sales
rose field
Type assumed
Increase/Decrease
Scrap Rate as % of Sales 3% $300,000 Scrap
-10% $297,000 impacts to each factor
in green fields
DO NOT TYPE -
Direct Labor as a % of Increase/Decrease
15% $1,500,000 Productivity
-10% $1,485,000 Formulas will
Sales calculate
DO NOT TYPE -
All Overhead Labor as a % Increase/Decrease
20% $2,000,000 Productivity
-10% $1,980,000 Formulas will
of Sales calculate
Increase/Decrease
Material as a % of Sales 20% $2,000,000 Material % Content
0% $2,200,000
Equals
Formula assumes that half of
Sales -
the other expenses will
(Scrap +
All other expenses Labor +
$3,200,000 increase in same ratio as $3,360,000
sales increase and the
Material +
others will remain fixed
Net Profit)
Net Profit as a % of Sales 10% $1,000,000 $1,678,000
Net Increase/Decrease in Profit $678,000
Increase/Decrease in
inventory investment?
$0
ROI Calculations Rough Cash Impactors
Increase/Decrease in
Cash into Cap Ex
$100,000
Estimated Cash Increase/Decrease (assuming no change in
AP/AR payment/collection practices)
$578,000
Revision B Completed Example Prepared by Cristi Cristich
cbad26eb-067c-4244-b3cc-ba8a080b4fa0.xls
Step 1 - Complete Baseline Information
Existing Condition Type in rose fields only!
Annual Revenue Type the annual revenue in gross dollars
Type the estimated scrap rate expressed as a percentage of sales; if you
only know the amount of scrap you had as an actual number, divide that
Scrap Rate as % of Sales number by your gross sales on a calculator and they type the resulting
percentage into the red field
Direct Labor as a % of
Type the estimated labor percentages - direct labor & overhead labor
Sales expressed as a percentage of gross sales. If you do not know the
DO NOT TYPE
breakdown between direct and overhead just put the total number in direct
All Overhead Labor as a % IN YELLOW labor and skip the overhead labor section.
of Sales AREAS.
THESE FIELDS
CALCULATE. Type the estimated material percentage content your company has in its
Material as a % of Sales products on average,
Equals
Sales -
(Scrap +
All other expenses Labor +
This field will automatically calculate once all other red areas are completed.
Material +
Net Profit)
Net Profit as a % of Sales Type in your estimated percentage of net, pre-tax profit.
Work Instruction
Revision B 4 of 7 prepared by Cristi Cristich
cbad26eb-067c-4244-b3cc-ba8a080b4fa0.xls
Step 2 - Calculate Possible Profit & Cash Impacts By Factor
After Improvements Type in green fields only!
Type a percentage change in sales - increase is a positive percentage and
Increase/Decrease Sales
decrease is a negative percentage.
Type a percentage change in scrap - increase is a positive percentage and
Increase/Decrease Scrap
decrease is a negative percentage.
Increase/Decrease Productivity DO NOT TYPE Type a percentage change in productivity for both labor categories -
IN YELLOW increased productivity is a negative percentage and decrease is a positive
AREAS. percentage.
Increase/Decrease Productivity
THESE FIELDS
Increase/Decrease Material % CALCULATE. Type a percentage change in scrap - increase is a positive percentage and
Content decrease is a negative percentage.
Formula assumes that half of the
This field calculates based on the assumptions in the grey column on the
other expenses will increase in
left. If you know how much in this category is variable tied to sales and
same ratio as sales increase and the
others will remain fixed
how much is fixed you can attempt to alter this but it is not recommended.
Step 3 - View Total Net Income Impact & Estimate Cash Impact for ROI Analysis
DO NOT TYPE - Type in green fields only! This field will calculate once all the red and
Net Increase/Decrease in Profit
WILL CALCULATE green fields above this step have been properly populated.
If you think your total inventory will go up to service the additional sales you
Increase/Decrease in inventory
anticipate or (hopefully) go down due to your new improved lean culture
investment?
type the total number of change estimated - higher inventory is positive.
If you think you will have to invest some of your cash into acquiring cap ex
Increase/Decrease in Cash into or servicing additional debts incurred as a result of capital investments
Cap Ex financed to achieve the sales change you assumed then type it here. Keep
in mind that most early kaizens require little or no capital investment.
Estimated Cash Increase/Decrease
DO NOT TYPE - Type in green fields only! This field will reflect an accurate value once ALL
(assuming no change in AP/AR
WILL CALCULATE red & green fields have been properly populated.
payment/collection practices)
Work Instruction
Revision B 5 of 7 prepared by Cristi Cristich
cbad26eb-067c-4244-b3cc-ba8a080b4fa0.xls
Work Instruction
Revision B 6 of 7 prepared by Cristi Cristich
cbad26eb-067c-4244-b3cc-ba8a080b4fa0.xls
Work Instruction
Revision B 7 of 7 prepared by Cristi Cristich
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