Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

At the end of last year, Edwin Inc. reported the following income statement (in millions of dollars): Sales $4,300.00 Operating costs excluding depreciation 3,026.00 EBITDA

At the end of last year, Edwin Inc. reported the following income statement (in millions of dollars):

Sales $4,300.00

Operating costs excluding depreciation 3,026.00

EBITDA $1,274.00

Depreciation 330.00

EBIT $944.00

Interest 150.00

EBT $794.00

Taxes (40%) 317.60

Net income $476.40

Looking ahead to the following year, the company's CFO has assembled this information:

  • Year-end sales are expected to be 4% higher than $4.3 billion in sales generated last year.
  • Year-end operating costs, excluding depreciation, will equal 80% of sales.
  • Depreciation costs are expected to increase at the same rate as sales.
  • Interest costs are expected to remain unchanged.
  • The tax rate is expected to remain at 40%.

On the basis of this information, what will be the forecast for Edwin's year-end net income? Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Enter all values as positive numbers. Do not round intermediate calculations. Round your answers to two decimal places.

(in millions of dollars)
Sales $
Operating costs excluding depreciation
EBITDA $
Depreciation
EBIT $
Interest
EBT $
Taxes
Net income

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Public Finance

Authors: Harvey Rosen

6th International Edition

0071121234, 978-0071121231

More Books

Students also viewed these Finance questions