Edmonds Industries is forecasting the following income statement: Sales Operating costs excluding depreciation & amortization EBITDA Depreciation and amortization $12,000,000 6,600,000 $5,400,000 1,680,000 EBIT $3,720,000 Interest 1,200,000 EBT $2,520,000 Taxes (25%) 630,000 Net income $1,890,000 The CEO would like to see higher sales and a forecasted net income of $2,550,000. Assume that operating costs (excluding depreciation and amortization) are 55% of sales and that depreciation and amortization and interest expenses will increase by 15%. The tax rate, which is 25%, will remain the same. (Note that while the tax rate remains constant, the taxes paid will change.) What level of sales would generate $2,550,000 in net income? Round your answer to the nearest dollar, if necessary. $
Edmonds Industries is forecasting the following income statement: Sales Operating costs excluding depreciation & amortization EBITDA Depreciation and amortization $12,000,000 6,600,000 $5,400,000 1,680,000 EBIT $3,720,000 Interest 1,200,000 EBT $2,520,000 Taxes (25%) 630,000 Net income $1,890,000 The CEO would like to see higher sales and a forecasted net income of $2,550,000. Assume that operating costs (excluding depreciation and amortization) are 55% of sales and that depreciation and amortization and interest expenses will increase by 15%. The tax rate, which is 25%, will remain the same. (Note that while the tax rate remains constant, the taxes paid will change.) What level of sales would generate $2,550,000 in net income? Round your answer to the nearest dollar, if necessary. $
Chapter14: Capital Structure Management In Practice
Section: Chapter Questions
Problem 2P
Related questions
Question
![Edmonds Industries is forecasting the following income statement:
Sales
Operating costs excluding depreciation & amortization
EBITDA
$12,000,000
6,600,000
$5,400,000
1,680,000
EBIT
$3,720,000
Interest
1,200,000.
EBT
$2,520,000
Taxes (25%)
630,000
Net income
$1,890,000
The CEO would like to see higher sales and a forecasted net income of $2,550,000. Assume
that operating costs (excluding depreciation and amortization) are 55% of sales and that
depreciation and amortization and interest expenses will increase by 15%. The tax rate, which
is 25%, will remain the same. (Note that while the tax rate remains constant, the taxes paid
will change.) What level of sales would generate $2,550,000 in net income? Round your answer
to the nearest dollar, if necessary.
Depreciation and amortization](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9f54014e-f0c4-4712-9fab-8bd47dbed54a%2F2f2665bf-72f1-4cf9-99b6-c758b74e6ad6%2F2isis2_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Edmonds Industries is forecasting the following income statement:
Sales
Operating costs excluding depreciation & amortization
EBITDA
$12,000,000
6,600,000
$5,400,000
1,680,000
EBIT
$3,720,000
Interest
1,200,000.
EBT
$2,520,000
Taxes (25%)
630,000
Net income
$1,890,000
The CEO would like to see higher sales and a forecasted net income of $2,550,000. Assume
that operating costs (excluding depreciation and amortization) are 55% of sales and that
depreciation and amortization and interest expenses will increase by 15%. The tax rate, which
is 25%, will remain the same. (Note that while the tax rate remains constant, the taxes paid
will change.) What level of sales would generate $2,550,000 in net income? Round your answer
to the nearest dollar, if necessary.
Depreciation and amortization
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