Edmonds Industries is forecasting the following income statement: Sales $11,000,000 Operating costs excluding depreciation & amortization 6,050,000
Question:
Edmonds Industries is forecasting the following income statement:
| Sales | $11,000,000 |
| Operating costs excluding depreciation & amortization | 6,050,000 |
| EBITDA | $4,950,000 |
| Depreciation and amortization | 660,000 |
| EBIT | $4,290,000 |
| Interest | 660,000 |
| EBT | $3,630,000 |
| Taxes (40%) | 1,452,000 |
| Net income | $2,178,000 |
The CEO would like to see higher sales and a forecasted net income of $3,312,000.
Assume that operating costs (excluding depreciation and amortization) are 55% of sales and that depreciation and amortization and interest expenses will increase by 8%.
The tax rate, which is 40%, will remain the same. (Note that while the tax rate remains constant, the taxes paid will change.)
What level of sales would generate $3,312,000 in net income?
(If necessary, round your answer to the nearest dollar at the end of the calculations.)
The income statement is a company's financial statement that shows the firm's operating revenue and cost. It is used to present the operating performance of the company over a certain period.
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