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ework an. 16 X 1 10 The AI equation provides useful insights into the forecasting process, but this equation assume that of the fire's key

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ework an. 16 X 1 10 The AI equation provides useful insights into the forecasting process, but this equation assume that of the fire's key ratios remain constant, which is not kely to hold trus. Consequently, it is useful to forecast the firm's financial statements. The firm begins with forecastings Select which then feeds to the firm's balance sheet. Management looks at operating rates and their relationship with industry and benchmark averages. The forecasted Income statement begins with the prior year's come statement and adjusted for the sales growth forecast. Some inputs for the income statement are not under the firm's control for example, tax and interest rates. The Forecasted balance sheet is calculated from east ratios that management has reviewed and changed based on industry and benchmark averages. An Excel spreadsheet is used for this analysis because changes in assomptions, financing, and ratios can be made to the statements to review alternative scenarios. The impact of these changes on the firm's forecasted financial statements ately can be used to improve this operations Quantitative Problemi At the end of last year, Edwin Inc. reported the following income statement in milions of dollars) $4,300.00 Operating costs excluding depreciation 3.055.00 EBITDA $1,245.00 Depreciation 350.00 EBIT 5895.00 130.00 5765.00 Taxes (40%) 306.00 Net Income 5450.00 Looking ahead to the following year, the company's CFO has assembled this information Year end sales are expected to be higher than $4.3 billion in sales generated last year. Year-end operating costs, exclusing depreciation, will equal of sale. Depreciation costs are expected to increase at the same rate as sales . Interest costs are expected to remain unchanged. The taxe is expected to remain 40 On the basis of this information, what will be the Forecast for Edwin's year end net income? Ester your answers in million. For example, en ef $10,550,000 should be entered as 10.55. Enter al values as positive numbers. Do not found intermediate actions. Round your answers to two decimal places (in Millions of dollars) Sales Operating costs excluding depreciation EBITDA Depreciation EBIT Interest EBT Taxes Not income 5 5 5

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