Question
Edmonds Industries is forecasting the following income statement: Sales $8,000,000 Operating costs excluding depreciation & amortization 4,400,000 EBITDA $3,600,000 Depreciation and amortization 800,000 EBIT $2,800,000
Edmonds Industries is forecasting the following income statement:
Sales | $8,000,000 |
Operating costs excluding depreciation & amortization | 4,400,000 |
EBITDA | $3,600,000 |
Depreciation and amortization | 800,000 |
EBIT | $2,800,000 |
Interest | 720,000 |
EBT | $2,080,000 |
Taxes (40%) | 832,000 |
Net income | $1,248,000 |
The CEO would like to see higher sales and a forecasted net income of $2,059,200. Assume that operating costs (excluding depreciation and amortization) are 55% of sales and that depreciation and amortization and interest expenses will increase by 5%. 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 $2,059,200 in net income? Round your answer to the nearest dollar, if necessary.
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