Sales revenue $11,250,000 Variable expenses $6,250,000 Fixed expenses $2,500,000 Total expenses $8,750,000 Operating income $2,500,000 If sales increase by 5%, what will the new operating income be?
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Sales revenue $11,250,000
Variable expenses $6,250,000
Fixed expenses $2,500,000
Total expenses $8,750,000
Operating income $2,500,000
If sales increase by 5%, what will the new operating income be?
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- EXCESS CAPACITY Krogh Lumbers 2019 financial statements are shown here. Krogh Lumber: Balance Sheet as of December 31, 2019 (thousands of dollars) Krogh Lumber: Income Statement for December 31, 2019 (thousands of dollars) a. Assume that the company was operating at full capacity in 2019 with regard to all items except fixed assets; fixed assets in 2019 were being utilized to only 75% of capacity. By what percentage could 2020 sales increase over 2019 sales without the need for an increase in fixed assets? b. Now suppose 2020 sales increase by 25% over 2019 sales. Assume that Krogh cannot sell any fixed assets. All assets other than fixed assets will grow at the same rate as sales; however, after reviewing industry averages, the firm would like to reduce its operating costs/sales ratio to 82% and increase its total liabilities-to-assets ratio to 42%. The firm will maintain its 60% dividend payout ratio, and it currently has 1 million shares outstanding. The firm plans to raise 35% of its 2020 forecasted interest-bearing debt as notes payable, and it will issue bonds for the remainder. The firm forecasts that its before-tax cost of debt (which includes both short- and long-term debt) is 11%. Any stock issuances or repurchases will be made at the firms current stock price of 40. Develop Kroghs projected financial statements like those shown in Table 16.2. What are the balances of notes payable, bonds, common stock, and retained earnings?In a period, sales are $140,000, purchases $75,000 and other expenses $25,000. What is the figure for net profit to be transferred to the capital account? A $40,000 B $65,000 C $75,000 D $140,000Ram Company had $1,000,000 of sales with a CM ratio of 30% and fixed expenses of $250,000 this year. Assume that the company’s sales will increase by $150,000 next year. If there is no change in fixed expenses, by how much will net operating income increase? a) 45,000 b) 60,000 c) 30,000 d) 15,000
- Company XYZ is currently making sales of $200,000. At this level, the variable expenses viere $160,000 . Assume that company XYZ expects sales to increase to $450,003 in coming period with no change is expected to fixed expenses. How much is the expected change in profit ? a- Increase by $ 10,000 b -Increase by 40,000 C- increase by $ 50,000 D-be determined E- Increase by $160,000Sales are 150,000. COGS are 100,000. SG&A Overhead is 20,000. Depreciation is 15,000. Interest Expense is 10,000. Capital Expenditures is 15,000. Net Working Capital is not expected to rise by 1,000. The tax rate is 35%. What is FCF? Is the answer 160,000?Sales are 150,000. COGS are 100,000. SG&A Overhead is 20,000. Depreciation is 15,000. Interest Expense is 10,000. Capital Expenditures is 15,000. Net Working Capital is not expected to rise by 1,000. The tax rate is 20%. What is FCF?
- INCOME STATEMENT Hermann Industries is forecasting the following income statement:Sales $8,000,000Operating costs excluding depr. & amort. 4,400,000EBITDA $3,600,000Depreciation & amortization 800,000EBIT $2,800,000Interest 600,000EBT $2,200,000Taxes (40%) 880,000Net income $1,320,000The CEO would like to see higher sales and a forecasted net income of $2,500,000. Assumethat operating costs (excluding depreciation and amortization) are 55% of sales and thatdepreciation and amortization and interest expenses will increase by 10%. The tax rate, whichis 40%, will remain the same. What level of sales would generate $2,500,000 in net income?Given the following information:SalesFixed ExpensesVariable Expensess5,0002,0001,750What would expected operating profit be if the company experienced a 10% increase in fixedcosts and a 100/0 increase m sales volume? a) $1,375. b) $1,550. c) $1,250. d) $1,750.This Year’s Actual Results Next Year’s Initial Forecast Net sales $17,000,000 $20,060,000 Cost of goods sold 13,600,000 16,048,000 Gross profit $3,400,000 $4,012,000 Fixed operating costs except depreciation 850,000 850,000 Depreciation 340,000 401,200 Earnings before interest and taxes $2,210,000 $2,607,800 Interest 340,000 340,000 Earnings before taxes $1,870,000 $2,267,800 Taxes 748,000 907,120 Net income $1,122,000 1,360,680 Common dividends 605,880 605,880 Addition to retained earnings $516,120 $754,800 Earnings per share $0.22 $0.27 Dividends per share $0.12 $0.12 Number of common shares (millions) 5.00 5.00 Which of the following are assumptions made by the initial income statement forecast? Check all that apply. The forecasted increase in net sales is 18.00%. No additional external financing will be required. The assigned depreciation method has changed. The facility is not currently operating at full capacity.…
- If IT Company has a 10% ROS, income of P5,000, and an investment turnover of 4 times, divisional investment is A.P5,000B.P12.500C.P20,000D.P50,000INCOME 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? *Net sales amounted 100,000 with cost of representing 70%. If operating expenses is 5% of sales, the net income will be??
