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Click here to read the eBook: The Income Statement Problem Walk-Through INCOME STATEMENT Edmonds Industries...

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Accounting

Click here to read the eBook: The Income Statement Problem Walk-Through

INCOME STATEMENT

Edmonds Industries is forecasting the following income statement:

Sales $9,000,000
Operating costs excluding depreciation & amortization 4,950,000
EBITDA $4,050,000
Depreciation and amortization 540,000
EBIT $3,510,000
Interest 450,000
EBT $3,060,000
Taxes (40%) 1,224,000
Net income $1,836,000

The CEO would like to see higher sales and a forecasted net income of $2,937,600. Assume that operating costs (excluding depreciation and amortization) are 55% of sales and that depreciation and amortization and interest expenses will increase by 9%. The tax rate, which is 40%, will remain the same. (Note that while the tax rate remains constant, the taxes paid will change.) What level of sales would generate $2,937,600 in net income? If necessary, round your answer to the nearest dollar at the end of the calculations. $

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