3-8 INCOME STATEMENT Hermann Industries is forecasting the following income statement: Sales $8,000,000 Operating costs excluding depr. & amort. 4,400,000 ЕВITDA $3,600,000 Depreciation & amortization 800,000 EBIT $2,800,000 Interest 600,000 EBT $2,200,000 Taxes (40%) 880,000 $1,320,000 Net income The CEO would like to see higher sales and a forecasted net income of $2,500,000. Assume that operating costs (excluding depreciation and amortization) are 55% of sales and that depreciation and amortization and interest expenses will increase by 10%. The tax rate, which is 40%, will remain the same. What level of sales would generate $2,500,000 in net income?
3-8 INCOME STATEMENT Hermann Industries is forecasting the following income statement: Sales $8,000,000 Operating costs excluding depr. & amort. 4,400,000 ЕВITDA $3,600,000 Depreciation & amortization 800,000 EBIT $2,800,000 Interest 600,000 EBT $2,200,000 Taxes (40%) 880,000 $1,320,000 Net income The CEO would like to see higher sales and a forecasted net income of $2,500,000. Assume that operating costs (excluding depreciation and amortization) are 55% of sales and that depreciation and amortization and interest expenses will increase by 10%. The tax rate, which is 40%, will remain the same. What level of sales would generate $2,500,000 in net income?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Hermann industries is
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3-8
INCOME STATEMENT Hermann Industries is forecasting the following income statement:
ms
Sales
$8,000,000
Operating costs excluding depr. & amort.
4,400,000
EBITDA
$3,600,000
Depreciation & amortization
800,000
$2,800,000
EBIT
Interest
600,000
$2,200,000
EBT
Taxes (40%)
880,000
Net income
$1,320,000
The CEO would like to see higher sales and a forecasted net income of $2,500,000. Assume
that operating costs (excluding depreciation and amortization) are 55% of sales and that
depreciation and amortization and interest expenses will increase by 10%. The tax rate, which
is 40%, will remain the same. What level of sales would generate $2,500,000 in net income?
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