Question
Edmonds Industries is forecasting the following income statement: Sales $4,000,000 Operating costs excluding depreciation & amortization 2,200,000 EBITDA $1,800,000 Depreciation and amortization 560,000 EBIT $1,240,000
Edmonds Industries is forecasting the following income statement:
Sales | $4,000,000 |
Operating costs excluding depreciation & amortization | 2,200,000 |
EBITDA | $1,800,000 |
Depreciation and amortization | 560,000 |
EBIT | $1,240,000 |
Interest | 280,000 |
EBT | $960,000 |
Taxes (40%) | 384,000 |
Net income | $576,000 |
The CEO would like to see higher sales and a forecasted net income of $806,400. Assume that operating costs (excluding depreciation and amortization) are 55% of sales and that depreciation and amortization and interest expenses will increase by 7%. 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 $806,400 in net income? Round your answer to the nearest dollar, if necessary.
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