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INCOME STATEMENT Edmonds Industries is fore-casting 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 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?

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Fundamentals of Financial Manageme...

9th Edition
Eugene F. Brigham + 1 other
Publisher: Cengage Learning
ISBN: 9781305635937
BuyFind

Fundamentals of Financial Manageme...

9th Edition
Eugene F. Brigham + 1 other
Publisher: Cengage Learning
ISBN: 9781305635937

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Chapter
Section
Chapter 3, Problem 15P
Textbook Problem

INCOME STATEMENT Edmonds Industries is fore-casting 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

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?

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Chapter 3 Solutions

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