Question

Listed is the 2015 income statement for Tom and Sue Travels, Inc.
Tom and Sue Travels, Inc.
Income Statement for Year Ending December 31, 2015
(in millions of dollars)
Net sales ................ $16.500
Less: Cost of goods sold.......... 7.100
Gross profits ............... 9.400
Less: Other operating expenses ....... 3.200
Earnings before interest, taxes, depreciation, and
amortization (EBITDA) .......... 6.200
Less: Depreciation ............. 2.900
Earnings before interest and taxes (EBIT) ... 3.300
Less: Interest ............... 0.950
Earnings before taxes (EBT) ........ 2.350
Less: Taxes .............. 0.705
Net income .............. $ 1.645
The CEO of Tom and Sue’s wants the company to earn a net income of $2.250 million in 2016. Cost of goods sold is expected to be 60 percent of net sales, depreciation and other operating expenses are not expected to change, interest expense is expected to increase to $1.050 million, and the firm’s tax rate will be 30 percent. Calculate the net sales needed to produce net income of $2.250 million.



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  • CreatedSeptember 23, 2014
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