Question
Income Statement Hermann Industries is forecasting the following income statement: Sales $6,000,000 Operating costs excluding depreciation & amortization 3,300,000 EBITDA $2,700,000 Depreciation and amortization 840,000
Income Statement Hermann Industries is forecasting the following income statement:
Sales $6,000,000
Operating costs excluding depreciation & amortization 3,300,000
EBITDA $2,700,000
Depreciation and amortization 840,000
EBIT $1,860,000
Interest 300,000
EBT $1,560,000
Taxes (40%) 624,000
Net income $936,000
The CEO would like to see higher sales and a forecasted net income of $1,638,000. 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 40%, will remain the same. What level of sales would generate $1,638,000 in net income? If necessary, round your answer to the nearest dollar at the end of the calculations.
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