Edmonds Industries is forecasting the following income statement:Sales$10,000,000Operating costs excluding depreciation and amortization5,500,000EBITDA$ 4,500,000Depreciation and amortization1,200,000EBIT$ 3,300,000Interest500,000$ 2,800,000EBTTaxes (40%)1,120,000Net income$ 1,680,000The CEO would like to see higher sales and a forecasted net income of $2,100,000. Assumethat operating costs (excluding depreciation and amortization) are 55% of sales and thatdepreciation and amortization and interest expenses will increase by 6%. The tax rate,which is 40%, will remain the same. (Note that while the tax rate remains constant, the taxespaid will change.) What level of sales would generate $2,100,000 in net income?

Forecast of sales value by taking the following points into account: Desired Net Income $2100000…

Answered: Edmonds Industries is forecasting the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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