ABC Inc. 2017 sales are $1,200,000. Operating costs (excluding depreciation) are 75% of sales. Net fixed assets

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Question:

ABC Inc. 2017 sales are $1,200,000. Operating costs (excluding depreciation) are 75% of sales. Net fixed assets are $165,000. Depreciation amounted to 11% of net fixed assets. Interest expenses are $80,000. The tax bill must be calculated using the corporate income tax table in the text, and ABC Inc. paid 12% of net income in dividends.

Prepare ABC Inc.’s income statement for 2017:

ABC Inc. Income Statement

2017

Sales

Operating costs (excluding depreciation)

EBITDA

Depreciation

EBIT

Interest Expense

EBT

Taxes***

Net Income

Common Dividends

Addition to Retained Earnings

Operating Cash Flow

***For Tax Rate use the corporate tax table in chapter 2 to determine the company’s tax bill, average and marginal tax rates. Use the average tax rate for this portion of the income statement.

Average tax ________

Marginal tax ________