Ozark Industries reported net income of $75 million in 2002. The company’s corporate tax rate was 40 percent and its interest expense was $25 million. The company had $500 million in sales and its cost of goods sold was $350 million. Ozark’s goal is for its net income to increase by 20 percent (to $90 million) in 2003. It forecasts that the tax rate will remain at 40 percent, interest expense will increase by 40 percent, and cost of goods sold will remain at 70 percent of sales. What level of sales (to the closest million) will Ozark have to produce in 2003 in order to meet its goal for net income?
Ozark Industries reported net income of $75 million in 2002. The company’s corporate tax rate was 40 percent and its interest expense was $25 million. The company had $500 million in sales and its cost of goods sold was $350 million. Ozark’s goal is for its net income to increase by 20 percent (to $90 million) in 2003. It forecasts that the tax rate will remain at 40 percent, interest expense will increase by 40 percent, and cost of goods sold will remain at 70 percent of sales. What level of sales (to the closest million) will Ozark have to produce in 2003 in order to meet its goal for net income?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Ozark Industries reported net income of $75 million in 2002. The company’s corporate tax rate was 40 percent and its
interest expense was $25 million. The company had $500 million in sales and its cost of goods sold was $350 million.
Ozark’s goal is for its net income to increase by 20 percent (to $90 million) in 2003. It
remain at 40 percent, interest expense will increase by 40 percent, and cost of goods sold will remain at 70 percent of
sales. What level of sales (to the closest million) will Ozark have to produce in 2003 in order to meet its goal for net
income?
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