Edmonds Industries is forecasting the following income statement: Sales Operating costs excluding depreciation & amortization EBITDA Depreciation and amortization EBIT Interest EBT Taxes (25%) Net income $12,000,000 6,600,000 $5,400,000 1,680,000 $3,720,000 720,000 $3,000,000 750,000 $2,250,000 The CEO would like to see higher sales and a forecasted net income of $3,170,000. 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 25%, will remain the same. (Note that while the tax rate remains constant, the taxes paid will change.) What level of sales would generate $3,170,000 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 EBIT Interest EBT Taxes (25%) Net income $12,000,000 6,600,000 $5,400,000 1,680,000 $3,720,000 720,000 $3,000,000 750,000 $2,250,000 The CEO would like to see higher sales and a forecasted net income of $3,170,000. 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 25%, will remain the same. (Note that while the tax rate remains constant, the taxes paid will change.) What level of sales would generate $3,170,000 in net income? Round your answer to the nearest dollar, if necessary.
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
Problem 1PS
Related questions
Question
Transcribed Image Text:ETE
8 Problem Walk-Through
eBook
Edmonds Industries is forecasting the following income statement:
$12,000,000
6,600,000
$5,400,000
1,680,000
EBIT
$3,720,000
Interest
720,000
EBT
$3,000,000
Taxes (25%)
750,000
$2,250,000
Net income
The CEO would like to see higher sales and a forecasted net income of $3,170,000. 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 25%, will remain the same. (Note that while the tax rate remains constant, the taxes paid
will change.) What level of sales would generate $3,170,000 in net income? Round your answer to the nearest dollar, if necessary.
$
Sales
Operating costs excluding depreciation & amortization
EBITDA
Depreciation and amortization
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 2 images
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education