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Accept or deny SNC is considering an opportunity to add Atlantic Wellness, a large,...

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Accounting

Accept or deny

SNC is considering an opportunity to add Atlantic Wellness, a large, successful health food chain as a new corporate customer for its herbal nutraceutical product line. Taking on this customer would immediately increase SNC's sales by $4 million per year (a one-time increase of 40%) and EBIT by $260,000. The profit margins and net working capital terms would remain the same as for SNC's existing business.

2013 2014 2015 Post 2015
Incremental Summary Income Statement ($ in thousands)
Sales $4,000 $4,000 $4,000 $4,000
Cost of Sales $3,740 $3,740 $3,740 $3,740
EBIT $260 $260 $260 $260
Incremental Balance Sheet ($ in thousands)
Accounts Receivable $1,205 $1,205 $1,205 $1,205
Inventories $922 $922 $922 $922
Accounts Payable $420 $420 $420 $420

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