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solve asap Question 1) (5 marks) Let us take the example of the Income Statement of ABC Company. It is anticipated that the revenues are
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Question 1) (5 marks) Let us take the example of the Income Statement of ABC Company. It is anticipated that the revenues are going to increase by 25 percent from the base year revenues. The cost of sales for the projected income statement would be 65 percent of projected sales. The operating expense amounted to 15 percent of the sales generated by the business, and the interest expense amounted to be the same as compared to the base year income statement. The interest expense for the base year was reported at $2,000. The business is taxed at a rate of 25 percent. Help the management prepare a projection on the income statement. Show all calculations. The base year income statement is as follows: - Income Statement ($) Line Item 2020 Sales $35,000 Cost of Sales $23,000 Gross Profit $12,000 Operating Expense $5,000 EBIT $7,000 Interest Expense $2,000 PBT $5,000 Taxes @25 % $1,250 PAT $3,750 Earnings before interest and taxes (EBIT), Profit before tax (PBT), Profit after tax (PAT)Step by Step Solution
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