Swann Systems is a small but fast-growing company headquartered in Bangalore, India. Bangalore is known as...
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Swann Systems is a small but fast-growing company headquartered in Bangalore, India. Bangalore is known as the "Silicon Valley of India" because of its role in the nation's leading information technology (IT) sector. The company's Corporate FP&A Department is forecasting the following income statement for the upcoming year: Sales Operating costs (excluding depreciation) Gross margin Depreciation EBIT Interest EBT Taxes (40%) Net income $5,000,000 $3,000,000 $2,000,000 $500,000 $1,500,000 $500,000 $1,000,000 400,000 $ 600,000 The company's CEO is disappointed with the forecast and would like to see Swann Systems generate higher sales and a forecasted net income of $3,000,000. Assume that operating costs (excluding depreciation) are always 60 percent of sales. Also, assume that depreciation, interest expense, and the company's tax rate, which is 40 percent, will remain the same even if sales change. What level of sales revenues would Swann have to obtain to generate $3,000,000 in net income? Show your calculations. Swann Systems is a small but fast-growing company headquartered in Bangalore, India. Bangalore is known as the "Silicon Valley of India" because of its role in the nation's leading information technology (IT) sector. The company's Corporate FP&A Department is forecasting the following income statement for the upcoming year: Sales Operating costs (excluding depreciation) Gross margin Depreciation EBIT Interest EBT Taxes (40%) Net income $5,000,000 $3,000,000 $2,000,000 $500,000 $1,500,000 $500,000 $1,000,000 400,000 $ 600,000 The company's CEO is disappointed with the forecast and would like to see Swann Systems generate higher sales and a forecasted net income of $3,000,000. Assume that operating costs (excluding depreciation) are always 60 percent of sales. Also, assume that depreciation, interest expense, and the company's tax rate, which is 40 percent, will remain the same even if sales change. What level of sales revenues would Swann have to obtain to generate $3,000,000 in net income? Show your calculations.
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Related Book For
Introduction to Management Science A Modeling and Cases Studies Approach with Spreadsheets
ISBN: 978-0078024061
5th edition
Authors: Frederick S. Hillier, Mark S. Hillier
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