Higher sales and a forecasted net income

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Income Statement

Edmonds Industries is forecasting the following income statement:

Sales

$11,000,000

Operating costs excluding depreciation & amortization

6,050,000

EBITDA

$4,950,000

Depreciation and amortization

1,650,000

EBIT

$3,300,000

Interest

550,000

EBT

$2,750,000

Taxes (40%)

1,100,000

Net income

$1,650,000

The CEO would like to see higher sales and a forecasted net income of $2,392,500. Assume that operating costs (excluding depreciation and amortization) are 55% of sales and that depreciation and amortization and interest expenses will increase by 8%. 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 $2,392,500 in net income? If necessary, round your answer to the nearest dollar at the end of the calculations.

Reference no: EM131201663

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