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problem: Income Statement Hermann Industries is forecasting following income statement;

Sales

$8, 000, 0000

Operating costs excluding Depreciation and amortization

$4,400,000

 

 

EBITDA

$3,600,000

Depreciation and amortization

800,000

EBIT

2,800,000

Interest

600,000

EBT

2,200,000

Taxes (40%)

880,000

Net Income

$1,320,000

The CEO would like to see a higher sales & a predicted net income of $2,500,000

Suppose that operating costs [excluding depreciation and amortization] are 55% of sales and depreciation and amortization and interest expenses will increase by 10%. The tax rate, which is 40%, will remain the same. What level of sales would create $2,500,000 in net income?

 

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M920658

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