6-8 USING COMMON-SIZE FINANCIAL STATEMENTS The B8G Construction Company expects to have total sales next year of $15,000,000. In addition, the firm pays taxes at 35% and will owe $300,000 in interest expense. Based on last year's operations, the firm's management predicts that its cost of goods sold will be 60% of sales and operating expenses will total 30% of sales. What is your estimate of the firm's net income (after taxes) for the copsing year? What else would you need to know in order to be able to calculate the firm's free cash flow for next year? \begin{tabular}{|lrr|r|} \hline & & Solution: \\ \hline Sales & $ & 15,000,000 & \\ Cost of Goods sold/Sales & & 60% & \\ Operating expenses/sales & & 30% & \\ Interest expense & $ & 300,000 & \\ Earnings before Taxes & & 0.35 & \\ Tax rate & & \\ Net Income & & \\ \hline \end{tabular}