Swann Systems is a small but fast-growing company headquartered in Bangalore, India. Bangalore is known as the "Silicon Valley of India" because of its role in the nation's leading information technology (IT) sector. The company's Corporate FP&A Department is forecasting the following income statement for the upcoming year: Sales Operating costs (excluding depreciation) Gross margin Depreciation EBIT Interest EBT Taxes (40%) Net income $5,000,000 $3,000,000 $2,000,000 $500,000 $1,500,000 $500,000 $1,000,000 400,000 $ 600,000 The company's CEO is disappointed with the forecast and would like to see Swann Systems generate higher sales and a forecasted net income of $3,000,000. Assume that operating costs (excluding depreciation) are always 60 percent of sales. Also, assume that depreciation, interest expense, and the company's tax rate, which is 40 percent, will remain the same even if sales change. What level of sales revenues would Swann have 40 obtain to generate $3,000,000 in net income? Show your calculations.
Swann Systems is a small but fast-growing company headquartered in Bangalore, India. Bangalore is known as the "Silicon Valley of India" because of its role in the nation's leading information technology (IT) sector. The company's Corporate FP&A Department is forecasting the following income statement for the upcoming year: Sales Operating costs (excluding depreciation) Gross margin Depreciation EBIT Interest EBT Taxes (40%) Net income $5,000,000 $3,000,000 $2,000,000 $500,000 $1,500,000 $500,000 $1,000,000 400,000 $ 600,000 The company's CEO is disappointed with the forecast and would like to see Swann Systems generate higher sales and a forecasted net income of $3,000,000. Assume that operating costs (excluding depreciation) are always 60 percent of sales. Also, assume that depreciation, interest expense, and the company's tax rate, which is 40 percent, will remain the same even if sales change. What level of sales revenues would Swann have 40 obtain to generate $3,000,000 in net income? Show your calculations.
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
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
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