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    Clean Edge For Students

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    TANISHA DAWAR
    The document presents profit and loss forecasts for Clean Edge under niche and mainstream scenarios over two years. In year 1 under the niche scenario, Clean Edge is forecasted to generate $38.49 million in total sales and $8.16 million in operating profit, representing a 21% profit margin. Costs of cannibalizing existing razor and cartridge sales are estimated to reduce profit to $3.62 million. Under the mainstream scenario in year 1, total sales are forecasted to be $87.42 million but operating profit is only $5.89 million due to higher costs.

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    Clean Edge For Students

    Uploaded by

    TANISHA DAWAR
    24 views2 pages
    The document presents profit and loss forecasts for Clean Edge under niche and mainstream scenarios over two years. In year 1 under the niche scenario, Clean Edge is forecasted to generate $38.49 million in total sales and $8.16 million in operating profit, representing a 21% profit margin. Costs of cannibalizing existing razor and cartridge sales are estimated to reduce profit to $3.62 million. Under the mainstream scenario in year 1, total sales are forecasted to be $87.42 million but operating profit is only $5.89 million due to higher costs.

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    Clean Edge for Students

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    The document presents profit and loss forecasts for Clean Edge under niche and mainstream scenarios over two years. In year 1 under the niche scenario, Clean Edge is forecasted to generate $38.49 million in total sales and $8.16 million in operating profit, representing a 21% profit margin. Costs of cannibalizing existing razor and cartridge sales are estimated to reduce profit to $3.62 million. Under the mainstream scenario in year 1, total sales are forecasted to be $87.42 million but operating profit is only $5.89 million due to higher costs.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    24 views2 pages

    Clean Edge For Students

    Uploaded by

    TANISHA DAWAR
    The document presents profit and loss forecasts for Clean Edge under niche and mainstream scenarios over two years. In year 1 under the niche scenario, Clean Edge is forecasted to generate $38.49 million in total sales and $8.16 million in operating profit, representing a 21% profit margin. Costs of cannibalizing existing razor and cartridge sales are estimated to reduce profit to $3.62 million. Under the mainstream scenario in year 1, total sales are forecasted to be $87.42 million but operating profit is only $5.89 million due to higher costs.

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    You are on page 1of 2

    Profit and Loss Forecasts for Clean Edge Under Niche and Mainstream Scenarios ($ in Millions)

    Niche
    Sl. No. Source of data Year 1
    1 Unit sales - Razors Exhibit 7 1.0
    2 Dollar sales - Razors (1) * manuf price (Exhibit 7) $ 9.09
    3 Unit sales - Cartridges Exhibit 7 4.0
    4 Dollar sales - Cartridges (3) * manuf price (Exhibit 7) $ 29.40
    5 Total dollar sales (2) + (4) $ 38.49

    6 Production costs Razors (1) * prod cost (Exhibit 7) $ 5.00


    7 Production costs Cartridges (3) * prod cost (Exhibit 7) $ 9.72
    8 Capacity costs Capacity costs from Exhibit 7 $ 0.61
    9 Advertising and Promotion Exhibit 7 ₹ 15.00
    10 Total costs (6) + (7) + (8) + (9) ₹ 30.33

    11 Operating Profit (5) - (10) ₹ 8.16


    12 Profits as % of sales (11)/(5) 21%
    13 Cost of cannibalization - Razors (a) ₹ 0.62
    14 Cost of cannibalization - Cartridges (a) ₹ 3.92
    15 Profit after cannibalization (11) - (13) - (14) ₹ 3.62

    (a) Cannibalization cost = % cannibalization from Avail and Pro (5th paragraph in case under Positioning heading
    where the contribution per unit average for Avail and Pro is $1.76 for razors and $2.80 for cartridges (case foo
    Assumes cannibalization of 35% for Niche, 60% for Mainstream
    ($ in Millions)

    Niche Mainstream
    Year 2 Year 1 Year 2
    1.5 3.3 4
    $ 13.64 $ 25.84 $ 31.32
    10 9.9 21.9
    $ 73.50 $ 61.58 $ 136.22
    $ 87.14 $ 87.42 $ 167.54

    $ 7.50 $ 15.64 $ 18.96


    $ 24.30 $ 22.18 $ 49.06
    $ 0.87 $ 1.71 $ 2.45
    ₹ 16.00 ₹ 42.00 ₹ 39.00
    ₹ 48.67 ₹ 81.53 ₹ 109.47

    ₹ 38.47 ₹ 5.89 ₹ 58.07


    44% 7% 35%
    ₹ 0.92 ₹ 3.48 ₹ 4.22
    ₹ 9.80 ₹ 16.63 ₹ 36.79
    ₹ 27.74 ₹ -14.23 ₹ 17.06

    under Positioning heading) * unit sales * contribution per unit


    80 for cartridges (case footnote 2 under Company Overview heading)

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