1. Harley-Davidson Income Statement
eStudy.us
Harley-Davidson Income Statement
Revenue
2008
H-D / Buell Motorcycle
$4,278,400
Parts & Accessories
$858,748
General Merchandise
$313,835
Buell Motorcycle
$123,086
Defense and Other
$20,397
Total Revenue
$5,594,466
Cost of Product
$3,663,488
Gross Profit
$1,930,978
Expense
Operating Expense
$664,429
Advertising Expense
$300,000
Finance Operating Income
$82,765
Corporate Expense
$20,131
Total Operating Income
$1,029,183
Investment Income
$9,495
Interest Expense
$4,542
Income Before Taxes
$1,034,136
Income Taxes
$379,259
Net Income
$654,877
Harley-Davidson – an American motorcycle manufacture based in Milwaukee, WI
In 1903 William S. Harley and Arthur Davidson make available to the public the first production Harley-Davidson motorcycle.
Public in 1987 (NYSE)
Nearly zero debt
Current details
10.3% market share
686 dealers in U.S.A
267.4 thousand unit sales in 2008
9,700 employees
$25 Stock Price (NYSE)

2. eStudy.us New Harley-Davidson demand equation Possible Improvements
quantity demand for new Harley-Davidson motorcycles
price of new Harley-Davidson motorcycles
$16,000
average price of other new street motorcycles
$13,000
average price of used Harley-Davidson motorcycles
$10,000
Harley-Davidson advertising expense (millions)
$300 (millions)
average income of street motorcycle riders
$45,000
average price of gasoline
$2.64
average purchase value of Harley-Davidson parts and accessories
$500
average age of street motorcycle riders
42 years
Possible Improvements
Harley Davidson product line prices and quantities (multiple simultaneous demand functions)
Specific competitor prices (Honda, Suzuki, Yamaha, Kawasaki, BWM, etc…)
Insurance Price
Automobile Price Index

3. eStudy.us
New Harley-Davidson demand equation
inverse demand function

4. eStudy.us New Harley-Davidson demand elasticities Own price
Price of Competitive Bikes (Substitute)
Price Gasoline (Complement)
Income

5. eStudy.us
New Harley-Davidson cost equations

6. eStudy.us Harley-Davidson Income Statement PQ Demand Function Var.
Coef.
Elast.
Inter
H-D Price
-0.022
$16,000
-1.32
Comp. Price
0.0038
$13,000
0.18
Used H-D Price
143.2
$10,000
0.33
H-D Adv. Exp.
0.16
$300
Rider Income
0.029
$45,000
4.88
Gas Price
35.6
$2.64
0.35
Parts / Mer Price
-0.46
$500
-0.86
Rider Age
4.7 42
Motorcycle Sales
267.4
Harley-Davidson Income Statement
Revenue
2008
H-D / Buell Motorcycle
$4,278,400
Parts & Accessories
$858,748
General Merchandise
$313,835
Buell Motorcycle
$123,086
Defense and Other
$20,397
Total Revenue
$5,594,466
Cost of Product
$3,663,488
Gross Profit
$1,930,978
Expense
Operating Expense
$664,429
Advertising Expense
$300,000
Finance Operating Income
$82,765
Corporate Expense
$20,131
Total Operating Income
$1,029,183
Investment Income
$9,495
Interest Expense
$4,542
Income Before Taxes
$1,034,136
Income Taxes
$379,259
Net Income
$654,877 PQ
Total Cost Function
Exp1 3
Coef1
0.12
Exp2 2
Coef2
76.5
Coef3
20,000
Coef4
1,491,069

7. eStudy.us Harley-Davidson Income Statement Demand Var. Coef. LevelB C D E F G H I J 1
Revenue
2008
Demand 2
H-D / Buell Motorcycle
$4,278,400
Var.
Coef.
Level
Variables
Elast. 3
Parts & Accessories
$858,748
Inter 4
General Merchandise
$313,835
H-D Price
-0.022
$16,000
-1.32 5
Buell Motorcycle
$123,086
Comp. Price
0.0038
$13,000
0.18 6
Defense and Other
$20,397
Used H-D Price
143.2
0.625
$10,000
0.33 7
Total Revenue
$5,594,466
H-D Adv. Exp.
0.16
$300 8
Cost of Product
$3,663,488
Rider Income
0.029
$45,000
4.88 9
Gross Profit
$1,930,978
Gas Price
35.6
$2.64
0.35 10
Expense
Parts / Mer Price
-0.46
$500
-0.86 11
Operating Expense
$664,429
Rider Age
4.7 42 12
Advertising Expense
$300,000 13
Finance Operating Income
$82,765
Motorcycle Sales
267.4 14
Corporate Expense
$20,131 15
Total Operating Income
$1,029,183
Total Cost 16
Exp1 17
Investment Income
$9,495
Coef1
0.12 18
Interest Expense
$4,542
Exp2 19
Income Before Taxes
$1,334,136
Coef2
76.5 20
Income Taxes
$379259
0.37
Tax Rate
Coef3
20,000 21
Net Income
$654,877
Coef4
1,491,069
=G13*H4
=G17*G13^G16-G19*G13^G18+G20*G13+G21
=SUMPRODUCT(G3:G11,H3:H11)

8. eStudy.us Statistical Error and Financial Relevance
95% confident that the true coefficient is between and
Demand Function
Variable
Coef.
Std. Error
Low
High
Intercept
H-D Price
-0.022
Comp. Price
0.0038
Used H-D Price
143.2
1.54
H-D Adv. Exp.
0.16
0.0022
Rider Income
0.029
Gas Price
35.6
1.11
Parts / Mer Price
-0.46
-0.005
Rider Age
4.7
0.2
4.308
5.092

9. eStudy.us Statistical Error and Financial Relevance Revenue Conf. Low
Point Est.
Conf. High
Demand
Sales
191.6
267.4
343.2
Variable
Coef.
Low
High
H-D / Buell Motorcycle
$3,065,524
$4,278,400
$5,491,276
Inter
Parts & Accessories
$858,748
H-D Price
-0.022
General Merchandise
$313,835
Comp. Price
0.0038
Buell Motorcycle
$123,086
Used H-D Price
143.2
Defense and Other
$20,397
H-D Adv. Exp.
0.16
Total Revenue
$4,381,590
$5,594,466
$6,807,342
Rider Income
0.029
Cost of Product
$3,358,742
$3,663,488
$4,195,377
Gas Price
35.6
Gross Profit
$1,022,848
$1,930,978
$2,611,965
Parts / Mer Price
-0.46
Expense
Rider Age
4.7
4.308
5.092
Operating Expense
$664,429
Advertising Expense
$300,000
Motorcycle Sales
Finance Operating Income
$82,765
Corporate Expense
$20,131
Total Operating Income
$121,053
$1,029,183
$1,710,170
Critical-t=
1.96
Investment Income
$9,495
Interest Expense
$4,542
Income Before Taxes
$126,006
$1,034,136
$1,715,123
Income Taxes
$46,211
$379,259
$629,004
Net Income
$79,795
$654,877
$1,086,119

10. eStudy.us
Profit Maximizing level of Harley-Davidson production

11. eStudy.us Profit Maximizing level of Harley-Davidson production Q TC
TFC
TVC MC
AVC
AFC
ATC
Price MR TR
Profit
250
$3,584,819
$1,491,069
$2,093,750
$4,250
$8,375
$5,964
$14,339
$16,791
$5,427
$4,197,727
$612,908
251
$3,589,083
$2,098,014
$4,277
$8,359
$5,941
$14,299
$16,745
$5,336
$4,203,109
$614,026
252
$3,593,374
$2,102,305
$4,305
$8,342
$5,917
$14,259
$16,700
$5,245
$4,208,400
$615,026
253
$3,597,694
$2,106,625
$4,334
$8,327
$5,894
$14,220
$16,655
$5,155
$4,213,600
$615,906
254
$3,602,043
$2,110,974
$4,364
$8,311
$5,870
$14,181
$16,609
$5,064
$4,218,709
$616,666
255
$3,606,422
$2,115,353
$4,394
$8,296
$5,847
$14,143
$16,564
$4,973
$4,223,727
$617,306
256
$3,610,831
$2,119,762
$4,425
$8,280
$5,824
$14,105
$16,518
$4,882
$4,228,655
$617,824
257
$3,615,272
$2,124,203
$4,457
$8,265
$5,802
$14,067
$16,473
$4,791
$4,233,491
$618,219
258
$3,619,744
$2,128,675
$4,489
$8,251
$5,779
$14,030
$16,427
$4,700
$4,238,236
$618,492
259
$3,624,250
$2,133,181
$4,522
$8,236
$5,757
$13,993
$16,382
$4,609
$4,242,891
$618,641
260
$3,628,789
$2,137,720
$4,556
$8,222
$5,735
$13,957
$16,336
$4,518
$4,247,455
$618,666
261
$3,633,362
$2,142,293
$4,591
$8,208
$5,713
$13,921
$16,291
$4,427
$4,251,927
$618,565
262
$3,637,970
$2,146,901
$4,626
$8,194
$5,691
$13,885
$16,245
$4,336
$4,256,309
$618,339
263
$3,642,614
$2,151,545
$4,662
$8,181
$5,669
$13,850
$16,200
$4,245
$4,260,600
$617,986
264
$3,647,294
$2,156,225
$4,699
$8,168
$5,648
$13,816
$16,155
$4,155
$4,264,800
$617,506
265
$3,652,012
$2,160,943
$4,736
$8,155
$5,627
$13,781
$16,109
$4,064
$4,268,909
$616,898
266
$3,656,767
$2,165,698
$4,774
$8,142
$5,606
$13,747
$16,064
$3,973
$4,272,927
$616,161
267.4
$3,663,488
$2,172,419
$4,829
$8,124
$5,576
$13,700
$16,000
$3,845
$4,278,400
$614,912
268
$3,666,393
$2,175,324
$4,853
$8,117
$5,564
$13,681
$15,973
$3,791
$4,280,691
$614,298
269
$3,671,266
$2,180,197
$4,893
$8,105
$5,543
$13,648
$15,927
$3,700
$4,284,436
$613,171
270
$3,676,179
$2,185,110
$4,934
$8,093
$5,522
$13,615
$15,882
$3,609
$4,288,091
$611,912
271
$3,681,134
$2,190,065
$4,976
$8,081
$5,502
$13,584
$15,836
$3,518
$4,291,655
$610,521
272
$3,686,131
$2,195,062
$5,018
$8,070
$5,482
$13,552
$15,791
$3,427
$4,295,127
$608,997
273
$3,691,171
$2,200,102
$5,061
$8,059
$5,462
$13,521
$15,745
$3,336
$4,298,509
$607,339
274
$3,696,254
$2,205,185
$5,105
$8,048
$5,442
$13,490
$15,700
$3,245
$4,301,800
$605,546
275
$3,701,382
$2,210,313
$5,150
$8,038
$5,422
$13,460
$15,655
$3,155
$4,305,000
$603,619