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Calculation of sales planning and gross profit planning

Hey! I would like to know why the sales planning is EUR 501.5m here? How is this calculated? 

And for gross profit planning, I think we should use the sales planning number as the basis to multipy gross margin. Why do we use the EUR 590m which is a current year number? 

Many thanks! 

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Top answer
Luca
Coach
on Apr 26, 2020
BCG |NASA | SDA Bocconi & Cattolica partner | GMAT expert 780/800 score | 200+ students coached

Hello Yaxin,

I will try to make it clear for you. For the sales planning of the next yea, you can consider: 

  • Sales of the last fiscal year = 660M€
  • Termination of production and sale of cat lavatories: -70M€ (table 3)
  • Adjustment of the product portfolio removing products <5€ : 15% * 590M€= 88.5M€ (Diagram 1)
  • Sales of next year = 660 - 70 - 88.5 = 501.5 M€ 

Regarding the gross profit planning, you use the 590M€ just to multiply it by the percentage that you have in diagram 1, in order to calculate the volume. It's enough not to consider the cat lavatories and the artciles <5€ to have the answer for the next year.

Does it make sense?Feel free to text me for any urther question.

Best,
Luca

on Apr 26, 2020
Hey Luca! Thanks for your answer. I think it does help me understand it better. I am just wondering why we can't use 501.5 M€ as the basis for the second question to multiply it by the margin.
Luca
Coach
on Apr 26, 2020
BCG |NASA | SDA Bocconi & Cattolica partner | GMAT expert 780/800 score | 200+ students coached
Because those margins refer to the 590M€ basis, pm me if it's still not clear
on Apr 26, 2020
Yeah quite clear now. Thanks a lot!
Deleted user
on Apr 27, 2020

Hi Yaxin,

I agree with Luca

Best,

André

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