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 800,000 EBIT $3,700,000
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 | 800,000 |
EBIT | $3,700,000 |
Interest | 1,000,000 |
EBT | $2,700,000 |
Taxes (40%) | 1,080,000 |
Net income | $1,620,000 |
The CEO would like to see higher sales and a forecasted net income of $2,025,000. Assume that operating costs (excluding depreciation and amortization) are 55% of sales and that depreciation and amortization and interest expenses will increase by 6%. The tax rate, which is 40%, will remain the same. (Note that while the tax rate remains constant, the taxes paid will change.) What level of sales would generate $2,025,000 in net income? Round your answer to the nearest dollar, if necessary.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started