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'sCorporate FP&A Department is forecasting the following income statement for the upcoming year:SalesOperating costs (excluding depreciation)Gross marginDepreciationEBITInterestEBTTaxes (40%)Net income$5,000,000$3,000,000$2,000,000$500,000$1,500,000$500,000$1,000,000400,000$ 600,000The 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 60percent 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 to obtain to generate$3,000,000 in net income? Show your calculations.

Operating costs are those costs which are necessary for the business operations. Gross margin is the…

Answered: Swann Systems is a small but…

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

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