Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Listed below is the 2021 income statement for Tom and Sue Travels, Inc. TOM AND SUE TRAVELS, INC. Income Statement for Year Ending December 31,

Listed below is the 2021 income statement for Tom and Sue Travels, Inc.

TOM AND SUE TRAVELS, INC.
Income Statement for Year Ending December 31, 2021
(in millions of dollars)
Net sales $ 17.000
Less: Cost of goods sold 7.700
Gross profits $ 9.300
Less: Other operating expenses 3.500
Earnings before interest, taxes, depreciation, and amortization (EBITDA) $ 5.800
Less: Depreciation 2.500
Earnings before interest and taxes (EBIT) $ 3.300
Less: Interest 0.775
Earnings before taxes (EBT) $ 2.525
Less: Taxes 0.530
Net income $ 1.995

The CEO of Tom and Sues wants the company to earn a net income of $2.550 million in 2022. 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 $1.241 million, and the firms tax rate will be 21 percent.

Calculate the net sales needed to produce net income of $2.550 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

Step: 3

blur-text-image

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

Risk Management And Financial Institutions

Authors: John C. Hull

3rd Edition

1118269039, 9781118269039

More Books

Students also viewed these Finance questions