Edmonds Industries is forecasting the following income statement: Sales Operating costs excluding depreciation & amortization EBITDA Depreciation and amortization $11,000,000 6,050,000 $4,950,000 660,000 $4,290,000 880,000 $3,410,000 852,500 $2,557,500 Net income The CEO would like to see higher sales and a forecasted net income of $4,880,000. 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 25%, will remain the same. (Note that while the tax rate remains constant, the taxes paid will change.) What level of sales would generate $4,880,000 in net income? Round your answer to the nearest dollar, if necessary. EBIT Interest EBT Taxes (25%)
Edmonds Industries is forecasting the following income statement: Sales Operating costs excluding depreciation & amortization EBITDA Depreciation and amortization $11,000,000 6,050,000 $4,950,000 660,000 $4,290,000 880,000 $3,410,000 852,500 $2,557,500 Net income The CEO would like to see higher sales and a forecasted net income of $4,880,000. 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 25%, will remain the same. (Note that while the tax rate remains constant, the taxes paid will change.) What level of sales would generate $4,880,000 in net income? Round your answer to the nearest dollar, if necessary. EBIT Interest EBT Taxes (25%)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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
$11,000,000
6,050,000
$4,950,000
660,000
$4,290,000
880,000
$3,410,000
852,500
$2,557,500
The CEO would like to see higher sales and a forecasted net income of $4,880,000. 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 25%, will remain the same. (Note
that while the tax rate remains constant, the taxes paid will change.) What level of sales would generate $4,880,000 in net income? Round your answer to the nearest dollar, if necessary.
$
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