INCOME STATEMENT Hermann Industries is forecasting the following income statement:   Sales $8,000,000 Operating costs excluding 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?

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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INCOME STATEMENT Hermann Industries is forecasting the following income statement:


 

Sales

$8,000,000

Operating costs excluding 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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