INCOME STATEMENT XYZ Industries is forecasting the following income statement: Sales P8,000,000 Operating costs excl. depr. & amort. 4,400,000 EBITDA 3,600,000 Depreciation & amortization 800,000 EBIT 2,800,000 Interest 600,000 EBT 2,200,000 Taxes (40%) 880,000 Net income 1,320,000 The CEO would like to see higher sales and a forecasted net income of 2,500,000. Assume that operating costs (excluding depreciation and amortization) are 55% of sales and that depreciation and amortization and interest expenses will increase by 10%. The tax rate, which is 40%, will remain the same. What level of sales would generate 2,500,000 in net income?
INCOME STATEMENT XYZ Industries is forecasting the following income statement: Sales P8,000,000 Operating costs excl. depr. & amort. 4,400,000 EBITDA 3,600,000 Depreciation & amortization 800,000 EBIT 2,800,000 Interest 600,000 EBT 2,200,000 Taxes (40%) 880,000 Net income 1,320,000 The CEO would like to see higher sales and a forecasted net income of 2,500,000. Assume that operating costs (excluding depreciation and amortization) are 55% of sales and that depreciation and amortization and interest expenses will increase by 10%. The tax rate, which is 40%, will remain the same. What level of sales would generate 2,500,000 in net income?
Chapter12: Capital Structure
Section: Chapter Questions
Problem 10PROB
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INCOME STATEMENT XYZ Industries is forecasting the following income statement: Sales P8,000,000 Operating costs excl. depr. & amort. 4,400,000 EBITDA 3,600,000 Depreciation & amortization 800,000 EBIT 2,800,000 Interest 600,000 EBT 2,200,000 Taxes (40%) 880,000 Net income 1,320,000 The CEO would like to see higher sales and a forecasted net income of 2,500,000. Assume that operating costs (excluding depreciation and amortization) are 55% of sales and that depreciation and amortization and interest expenses will increase by 10%. The tax rate, which is 40%, will remain the same. What level of sales would generate 2,500,000 in net income? *
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