1) The CEO would like to see higher sales and a forecasted net income of $250,000. Assume that operating costs (excluding depreciation) will remain at 55% of sales, depreciation expense will increase by 5%, interest expense will not change, and the tax rate will remain the same. What level of sales would generate $250,000 of net income? Show answer in income statement format.
 

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for some of the items presented below. GAME LODGE had the following Financial Information & Income Statement for 2019: $ 1,387,000 762,850 $ 624,150 300,000 324,150 199,150 ● Game Lodge CEO has asked you to analyze and calculate information Sales Revenue Operating expenses (other than depreciation) EBITDA Depreciation expense EBIT Interest EBT Taxes (20%) Net Income ● Cash and equivalents Fixed Assets Current Liabilities Current Ratio $ $ $ $ $ $ 125,000 25,000 100,000 DSO ROE Game Lodge has no preferred stock - only common equity, current liabilities, and long-term debt. 120,000 450,000 125,000 3 X 41 days 15.4% The CEO has expressed some interest in bonds and wants to get an estimate on the interest rate. Assume: expected rate of inflation is expected to be 3% next year, fall to 2% for the following year, and decrease to 1% for each of the following years r* is to remain constant at 2% maturity risk premium is 0 for next year, and will increase by .10 for each following year, up to a limit of 1.0% for some of the items presented below. GAME LODGE had the following Financial Information & Income Statement for 2019: $ 1,387,000 762,850 $ 624,150 300,000 324,150 199,150 ● Game Lodge CEO has asked you to analyze and calculate information Sales Revenue Operating expenses (other than depreciation) EBITDA Depreciation expense EBIT Interest EBT Taxes (20%) Net Income ● Cash and equivalents Fixed Assets Current Liabilities Current Ratio $ $ $ $ $ $ 125,000 25,000 100,000 DSO ROE Game Lodge has no preferred stock - only common equity, current liabilities, and long-term debt. 120,000 450,000 125,000 3 X 41 days 15.4% The CEO has expressed some interest in bonds and wants to get an estimate on the interest rate. Assume: expected rate of inflation is expected to be 3% next year, fall to 2% for the following year, and decrease to 1% for each of the following years r* is to remain constant at 2% maturity risk premium is 0 for next year, and will increase by .10 for each following year, up to a limit of 1.0%

Answer rating: 100% (QA)

Game Lodge Forecasted Income Statement for Year with 250000 Net Income Sales Revenue 2000000 Operati... View the full answer