Edmonds Industries is forecasting the following income statement: Sales Operating costs excluding depreciation & amortization EBITDA Depreciation and amortization EBIT Interest $10,000,000 5,500,000 $4,500,000 1,400,000 $3,100,000 600,000 EBT Taxes (25%) Net income $2,500,000 625,000 $1,875,000 The CEO would like to see higher sales and a forecasted net income of $2,660,000. Assume that operating costs (excluding depreciation and amortization) are 55% of sales and that depreciation and amortization and interest expenses will increase by 12%. The tax rate, which is 25%, will remain the same. (Note that while the tax rate remains constant, the taxes paid will change.) What level of sales would generate $2,660,000 in net income? Round your answer to the nearest dollar, if necessary.
Edmonds Industries is forecasting the following income statement: Sales Operating costs excluding depreciation & amortization EBITDA Depreciation and amortization EBIT Interest $10,000,000 5,500,000 $4,500,000 1,400,000 $3,100,000 600,000 EBT Taxes (25%) Net income $2,500,000 625,000 $1,875,000 The CEO would like to see higher sales and a forecasted net income of $2,660,000. Assume that operating costs (excluding depreciation and amortization) are 55% of sales and that depreciation and amortization and interest expenses will increase by 12%. The tax rate, which is 25%, will remain the same. (Note that while the tax rate remains constant, the taxes paid will change.) What level of sales would generate $2,660,000 in net income? Round your answer to the nearest dollar, if necessary.
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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Transcribed Image Text:Edmonds Industries is forecasting the following income statement:
Sales
Operating costs excluding depreciation & amortization
EBITDA
Depreciation and amortization
$10,000,000
5,500,000
$4,500,000
1,400,000
EBIT
$3,100,000
Interest
600,000
EBT
$2,500,000
Taxes (25%)
625,000
$1,875,000
Net income.
The CEO would like to see higher sales and a forecasted net income of $2,660,000. Assume that operating costs (excluding depreciation and amortization) are 55% of
sales and that depreciation and amortization and interest expenses will increase by 12%. The tax rate, which is 25%, will remain the same. (Note that while the tax-
rate remains constant, the taxes paid will change.) What level of sales would generate $2,660,000 in net income? Round your answer to the nearest dollar, if necessary.
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