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1. The owner of Dennis Smith Co insisted that he wants to see a net income of $4,000,000, at least. He was informed that to

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1. The owner of Dennis Smith Co" insisted that he wants to see a net income of $4,000,000, at least. He was informed that to do so, operating costs (excluding depreciation and amortization) should remain at 50 percent of sales. Also, depreciation and amortization, interest expense, and the company's tax rate, which is 40 percent, will remain the same even if sales change. The task that should be done is a better job in marketing the sale of the company's products. What level of sales would Smith Company have to obtain to generate $4,000,000 in net income? The owner was shocked with the most recent Net Income achieved by his company. It appeared as follows: Sales Operating costs (excluding depreciation and amortization) EBITDA Depreciation and amortization EBIT Interest EBT Taxes (40%) Net income $10,000,000 5.000.000 $5,000,000 1.600.000 $3,400,000 1,400,000 $2,000,000 800.000 $ 1.200.000 O 25,268,000 O 19,333,334 O 17,208,522 0 28,000,000 O None of the above 2. Avatar Company uses the indirect method to prepare its statement of cash flows. Please refer to the following sections of the comparative balance sheet provided below. Calculate the net Cash flow from financing activities amount.* Accounts payable Accrued liabilities Long-term notes payable Total liabilities 2014 2013 54,000 S 6.000 2.000 1.000 $4,000 90.000 $ 90,000 $97.000 30.000 Common stock Retained earnings Treasury stock Total equiry 2000 113.000 74.000 (8000) (5.000) $135.000 S 71.000 Total liabilities and equity $225.000 $168.000 Additional information: No stock was retired No treasury stock was sold. During 2014, the company repaid $40.000 of long-term notes payable. During 2014, the company borrowed 534,000 on a new note payable. Net income for the year was $49.000 $7,000 $ 8,000 $ 9,000 $ 10,000 O None of the above

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