Question
Using the Income Statement below for Edmond Industries, please answer the following question: The CEO would like to see higher sales and a forecasted net
Using the Income Statement below for Edmond Industries, please answer the following question:
The CEO would like to see higher sales and a forecasted net income of $2,100,000. Assume that operating costs (excluding depreciation and amortization) are 55% of sales and that depreciation and amortization and interest expenses will increase by 6%. The tax rate, which is 40%, will remain the same. (Note that while the tax rate remains constant, the taxes paid will change.) What level of sales would generate $2,100,000 in net income?
Edmonds Industries is forecasting the following income statement:
Sales | $10,000,000 |
Operating costs excluding depreciation & amortization | 5,500,000 |
EBITDA | $4,500,000 |
Depreciation and amortization | 1,200,000 |
EBIT | $3,300,000 |
Interest | 500,000 |
EBT | $2,800,000 |
Taxes (40%) | 1,120,000 |
Net income | $1,680,000 |
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