Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Listed below is the 2018 income statement for Tom and Sue Travels, Inc. TOM AND SUE TRAVELS, INC. Income Statement for Year Ending December 31,

Listed below is the 2018 income statement for Tom and Sue Travels, Inc.

TOM AND SUE TRAVELS, INC.
Income Statement for Year Ending December 31, 2018
(in millions of dollars)
Net sales $ 19.400
Less: Cost of goods sold 8.900
Gross profits $ 10.500
Less: Other operating expenses 4.100
Earnings before interest, taxes, depreciation, and amortization (EBITDA) $ 6.400
Less: Depreciation 3.700
Earnings before interest and taxes (EBIT) $ 2.700
Less: Interest 0.835
Earnings before taxes (EBT) $ 1.865
Less: Taxes 0.810
Net income $ 1.055

The CEO of Tom and Sues wants the company to earn a net income of $3.430 million in 2019. Cost of goods sold is expected to be 50 percent of net sales, depreciation and other operating expenses are not expected to change, interest expense is expected to increase to $0.935 million, and the firms tax rate will be 30 percent.

Calculate the net sales needed to produce net income of $3.430 million. (Enter your answer in millions of dollars rounded to 3 decimal places.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Economics Of Money Banking And Financial Markets

Authors: Frederic S. Mishkin

9th Edition

0321598903, 978-0321598905

More Books

Students also viewed these Finance questions

Question

Solve the equation. log 10 (log 2 2 10 ) = x

Answered: 1 week ago