forecasted balance sheet is calculated from asset ratios that management has reviewed and changed based on industry and benchmark averages. An Excel spreadsheet is used this analysis because changes in assumptions, financing, and ratios can be made to the statements to review alternative scenarios. The impact of these changes on the firm's forecasted financial statements ultimately can be used to improve the firm's operations. Quantitative Problem: At the end of last year, Edwin Inc. reported the following income statement (in millions of dollars): Sales Operating costs excluding depreciation EBITDA Depreciation EBIT Interest EBT Taxes (40%) Net income $764.00 305.60 $458.40 Looking ahead to the following year, the company's CFO has assembled this information: $4,250.00 3,016.00 $1,234.00 320.00 $914.00 150.00 • Year-end sales are expected to be 4% higher than $4.25 billion in sales generated last year. Year-end operating costs, excluding depreciation, will equal 80% of sales. . Depreciation costs are expected to increase at the same rate as sales. . Interest costs are expected to remain unchanged. . The tax rate is expected to remain at 40%. On the basis of this information, what will be the forecast for Edwin's year-end net income? Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Enter all values as positive numbers. Do not round intermediate calculations. Round your answers to two decimal places. Sales Operating costs excluding depreciation EBITDA Depreciation EBIT Interest EBT Taxes Net income (in millions of dollars) $ $ $ $
forecasted balance sheet is calculated from asset ratios that management has reviewed and changed based on industry and benchmark averages. An Excel spreadsheet is used this analysis because changes in assumptions, financing, and ratios can be made to the statements to review alternative scenarios. The impact of these changes on the firm's forecasted financial statements ultimately can be used to improve the firm's operations. Quantitative Problem: At the end of last year, Edwin Inc. reported the following income statement (in millions of dollars): Sales Operating costs excluding depreciation EBITDA Depreciation EBIT Interest EBT Taxes (40%) Net income $764.00 305.60 $458.40 Looking ahead to the following year, the company's CFO has assembled this information: $4,250.00 3,016.00 $1,234.00 320.00 $914.00 150.00 • Year-end sales are expected to be 4% higher than $4.25 billion in sales generated last year. Year-end operating costs, excluding depreciation, will equal 80% of sales. . Depreciation costs are expected to increase at the same rate as sales. . Interest costs are expected to remain unchanged. . The tax rate is expected to remain at 40%. On the basis of this information, what will be the forecast for Edwin's year-end net income? Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Enter all values as positive numbers. Do not round intermediate calculations. Round your answers to two decimal places. Sales Operating costs excluding depreciation EBITDA Depreciation EBIT Interest EBT Taxes Net income (in millions of dollars) $ $ $ $
Chapter9: Responsibility Accounting And Decentralization
Section: Chapter Questions
Problem 3PB: The income statement comparison for Rush Delivery Company shows the income statement for the current...
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
Knowledge Booster
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.Recommended textbooks for you
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT