Question
Edmonds Industries is forecasting the following income statement: Sales $10,000,000 Operating costs excluding depreciation & amortization 5,500,000 EBITDA $4,500,000 Depreciation and amortization 1,000,000 EBIT $3,500,000
Edmonds Industries is forecasting the following income statement:
Sales | $10,000,000 |
Operating costs excluding depreciation & amortization | 5,500,000 |
EBITDA | $4,500,000 |
Depreciation and amortization | 1,000,000 |
EBIT | $3,500,000 |
Interest | 900,000 |
EBT | $2,600,000 |
Taxes (25%) | 650,000 |
Net income | $1,950,000 |
The CEO would like to see higher sales and a forecasted net income of $2,440,000. Assume that operating costs (excluding depreciation and amortization) are 55% of sales and that depreciation and amortization and interest expenses will increase by 11%. The tax rate, which is 25%, will remain the same. (Note that while the tax rate remains constant, the taxes paid will change.) What level of sales would generate $2,440,000 in net income? Round your answer to the nearest dollar, if necessary.
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