The contribution margin is the proportion of sales revenues that contribute to overhead and profits. The company needed to maintain a 30% contribution margin or higher to maintain a nice profit. At the very least, you want to make sure that our contribution margin is greater than 20% of the product may start losing money (Capsim.com, n.d). The company R & D and marketing expenses were paid through the use of the contribution margin. Moreover, the contribution margin in years one was 26.3%, the lowest out of the eight years. It signified the need to invest in cost reduction strategies (automation/capacity expansion), price increases, and checking of MTBF against the customer Buying Criteria because we may have been offering customers more reliability than they care about. The remainder of the seven years the company contribution margin was up to standard (35.6%, 36.1, 39.6%, 31.1%, 35.5% & 35.5%) (Capsim.com, n.d)…show more content… Net cash from business operations is the money a company brings in from ongoing, regular business activities, such as manufacturing and selling goods or providing a service. Cash flow from operating activities does not include long-term capital or investment costs. It does include earnings before interest and taxes plus depreciation minus taxes (Cash Flow From Operating Activities, n.d). In years, one through two the production activities were funded from net cash from operation and the use of ($7200). Moreover, in year four, the production activities have been financed by bond, stocks and current debt ($2,000, $4,000 & $1,000). Likewise, in year five and six, it was funded by stocks ($7,000), bonds ($2,000) plant improvements ($3,945 & $595). Similarly, in years seven and eight, production activities were funded through the use of stocks ($10,000 & 9,000), plant improvements ($1300) (Capsim.com,
