Swann Systems is forecasting the following income statement for the upcoming year:Sales $5,000,000Operating costs (excluding depreciation) $3,000,000Gross margin $2,000,000Depreciation $500,000EBIT $1,500,000Interest $500,000EBT $1,000,000Taxes (40%) 400,000Net income $ 600,000The company’s president is disappointed with the forecast and would like to see Swann generate higher sales and a forecasted net income of $2,000,000. 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 would Swann have to obtain to generate $2,000,000 in net income?Show your calculations. Question 3Please review the two PPT packages below, and then prepare an essay (or memo) that includes the following elements. Limit to 2-4 pages (including charts / tables / references where applicable).What is the key theme of the two PPT slides?What are the key findings? Please summarize and elaborate.What are the major lessons learned from Credit Analysis & Underwriting perspectives?What are the hallmarks of good quality of earnings? What are the signs of bad quality of earnings

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Swann Systems is forecasting the following income statement for the upcoming year:Sales $5,000,000Operating costs (excluding depreciation) $3,000,000Gross margin $2,000,000Depreciation $500,000EBIT $1,500,000Interest $500,000EBT $1,000,000Taxes (40%) 400,000Net income $ 600,000The company’s president is disappointed with the forecast and would like to see Swann generate higher sales and a forecasted net income of $2,000,000. 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 would Swann have to obtain to generate $2,000,000 in net income?Show your calculations. Question 3Please review the two PPT packages below, and then prepare an essay (or memo) that includes the following elements. Limit to 2-4 pages (including charts / tables / references where applicable).What is the key theme of the two PPT slides?What are the key findings? Please summarize and elaborate.What are the major lessons learned from Credit Analysis & Underwriting perspectives?What are the hallmarks of good quality of earnings? What are the signs of bad quality of earnings 

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 1 images

Blurred answer
Knowledge Booster
Strategic business units
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education